[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Rules and Regulations]
[Pages 39870-39899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-15866]
[[Page 39869]]
Vol. 78
Tuesday,
No. 127
July 2, 2013
Part III
Department of the Treasury
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Internal Revenue Service
26 CFR Part 54
Department of Labor
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Employee Benefits Security Administration
29 CFR Parts 2510 and 2590
Department of Health and Human Services
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45 CFR Parts 147 and 156
Coverage of Certain Preventive Services Under the Affordable Care Act;
Final Rules
Federal Register / Vol. 78 , No. 127 / Tuesday, July 2, 2013 / Rules
and Regulations
[[Page 39870]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD-9624]
RIN 1545-BJ60
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Parts 2510 and 2590
RIN 1210-AB44
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 147 and 156
[CMS-9968-F]
RIN 0938-AR42
Coverage of 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: Final rules.
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SUMMARY: This document contains final regulations regarding coverage of
certain preventive services under section 2713 of the Public Health
Service Act (PHS Act), added by the Patient Protection and Affordable
Care Act, as amended, and incorporated into the Employee Retirement
Income Security Act of 1974 and the Internal Revenue Code. Section 2713
of the PHS Act requires coverage without cost sharing of certain
preventive health services by non-grandfathered group health plans and
health insurance coverage. Among these services are women's preventive
health services, as specified in guidelines supported by the Health
Resources and Services Administration (HRSA). As authorized by the
current regulations, and consistent with the HRSA guidelines, group
health plans established or maintained by certain religious employers
(and group health insurance coverage provided in connection with such
plans) are exempt from the otherwise applicable requirement to cover
certain contraceptive services. These final regulations simplify and
clarify the religious employer exemption. These final regulations also
establish accommodations with respect to the contraceptive coverage
requirement for group health plans established or maintained by
eligible organizations (and group health insurance coverage provided in
connection with such plans), as well as student health insurance
coverage arranged by eligible organizations that are institutions of
higher education. These regulations also finalize related amendments to
regulations concerning Affordable Insurance Exchanges.
DATES: Effective date: These final regulations are effective on August
1, 2013. Applicability date: With the exception of the amendments to
the religious employer exemption, which apply to group health plans and
health insurance issuers for plan years beginning on or after August 1,
2013, these final regulations apply to group health plans and health
insurance issuers for plan years beginning on or after January 1, 2014.
FOR FURTHER INFORMATION CONTACT: For inquiries related to the religious
employer exemption and eligible organization accommodations: Jacob
Ackerman, Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS), at (410) 786-1565; Amy Turner or Beth
Baum, Employee Benefits Security Administration (EBSA), Department of
Labor, at (202) 693-8335; Karen Levin, Internal Revenue Service (IRS),
Department of the Treasury, at (202) 927-9639.
For matters related to the Federally-facilitated Exchange user fee
adjustment: Ariel Novick, CMS, HHS, at (301) 492-4309.
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 (www.dol.gov/ebsa). Information from HHS on private health insurance coverage can be
found on CMS's Web site (www.cms.gov/cciio), and information on health
care reform can be found at www.HealthCare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30,
2010. These statutes are collectively known as 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 of 1974
(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 to make them applicable to group health plans
and health insurance issuers providing health insurance coverage in
connection with group health plans. The sections of the PHS Act
incorporated into ERISA and the Code are sections 2701 through 2728.
Section 2713(a)(4) 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 women's preventive health services without cost
sharing, as provided for in comprehensive guidelines supported by the
Health Resources and Services Administration (HRSA). On August 1, 2011,
HRSA adopted and released guidelines for women's preventive health
services (HRSA Guidelines) based on recommendations of the independent
Institute of Medicine. As relevant here, the HRSA Guidelines include
all Food and Drug Administration (FDA)-approved contraceptive methods,
sterilization procedures, and patient education and counseling for
women with reproductive capacity, as prescribed by a health care
provider (collectively, contraceptive services).\1\ Except as discussed
later in this section, non-grandfathered group health plans and health
insurance coverage are required to provide coverage consistent with the
HRSA Guidelines without cost sharing for plan years (in the individual
market, policy years) beginning on or after August 1, 2012.\2\
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\1\ The HRSA Guidelines exclude services relating to a man's
reproductive capacity, such as vasectomies and condoms.
\2\ 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 (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 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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Interim final regulations implementing section 2713 of the PHS Act
were published on July 19, 2010 (75 FR 41726) (2010 interim final
[[Page 39871]]
regulations). On August 1, 2011, the Departments of Health and Human
Services (HHS), Labor, and the Treasury (collectively, the Departments)
amended the 2010 interim final regulations to provide HRSA with
authority that would effectively exempt group health plans established
or maintained by certain religious employers (and group health
insurance coverage provided in connection with such plans) from the
requirement to cover contraceptive services consistent with the HRSA
Guidelines (76 FR 46621) (2011 amended interim final regulations), and,
on the same date, HRSA exercised this authority in the HRSA Guidelines
such that group health plans established or maintained by these
religious employers (and group health insurance coverage provided in
connection with such plans) are exempt from the requirement to cover
contraceptive services.\3\ The 2011 amended interim final regulations
specified that, for purposes of this exemption, 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
nonprofit organization described in section 6033(a)(1) and (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. Final regulations issued on February
10, 2012, adopted the definition of religious employer in the 2011
amended interim final regulations without modification (2012 final
regulations).\4\
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\3\ The 2011 amended interim final regulations were issued and
effective on August 1, 2011, and published on August 3, 2011(76 FR
46621).
\4\ The 2012 final regulations were published on February 15,
2012 (77 FR 8725).
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Contemporaneous with the issuance of the 2012 final regulations,
HHS, with the agreement of the Departments of Labor and the Treasury,
issued guidance establishing a temporary safe harbor from enforcement
of the contraceptive coverage requirement by the Departments for group
health plans established or maintained by certain nonprofit
organizations with religious objections to contraceptive coverage (and
group health insurance coverage provided in connection with such
plans).\5\ The guidance provided that the temporary enforcement safe
harbor would remain in effect until the first plan year beginning on or
after August 1, 2013. The Departments committed to rulemaking during
the 1-year safe harbor period to ensure more women broad access to
recommended preventive services, including contraceptive services,
without cost sharing, while simultaneously protecting certain
additional nonprofit religious organizations with religious objections
to contraceptive coverage from having to contract, arrange, pay, or
refer for such coverage.
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\5\ 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, issued on February 10, 2012, and reissued on August 15, 2012.
Available at: http://www.cms.gov/CCIIO/Resources/Files/Downloads/prev-services-guidance-08152012.pdf. The guidance, as reissued on
August 15, 2012, clarifies, among other things, that plans that took
some action before February 10, 2012, to try, without success, to
exclude or limit contraceptive coverage are not precluded from
eligibility for the safe harbor. The temporary enforcement safe
harbor is also available to insured student health insurance
coverage arranged by nonprofit institutions of higher education with
religious objections to contraceptive coverage that meet the
conditions set forth in the guidance. See final rule entitled
``Student Health Insurance Coverage'' published March 21, 2012 (77
FR 16457).
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On March 21, 2012, the Departments published an advance notice of
proposed rulemaking (ANPRM) that described and solicited comments on
possible approaches to achieve these goals (77 FR 16501).
On February 6, 2013, following review of the comments on the ANPRM,
the Departments published proposed regulations at 78 FR 8456 (proposed
regulations). The regulations proposed to simplify and clarify the
definition of religious employer for purposes of the religious employer
exemption. The regulations also proposed accommodations for health
coverage established or maintained or arranged by certain nonprofit
religious organizations with religious objections to contraceptive
coverage. These organizations were referred to as eligible
organizations.
The regulations proposed that, in the case of an insured group
health plan established or maintained by an eligible organization, the
health insurance issuer providing group health insurance coverage in
connection with the plan would be required to assume sole
responsibility, independent of the eligible organization and its plan,
for providing contraceptive coverage to plan participants and
beneficiaries without cost sharing, premium, fee, or other charge to
plan participants or beneficiaries or to the eligible organization or
its plan. The Departments proposed a comparable accommodation with
respect to insured student health insurance coverage arranged by
eligible organizations that are institutions of higher education.
In the case of a self-insured group health plan established or
maintained by an eligible organization, the proposed regulations
presented potential approaches under which the third party
administrator of the plan would arrange for a health insurance issuer
to provide contraceptive coverage to plan participants and
beneficiaries without cost sharing, premium, fee, or other charge to
plan participants or beneficiaries or to the eligible organization or
its plan. An issuer (or its affiliate) would be able to offset the
costs incurred by the third party administrator and the issuer in the
course of arranging and providing such coverage by claiming an
adjustment in the Federally-facilitated Exchange (FFE) user fee.
The Departments received over 400,000 comments (many of them
standardized form letters) in response to the proposed regulations.
After consideration of the comments, the Departments are publishing
these final regulations. With the exception of the amendments to the
religious employer exemption, which apply to group health plans and
group health insurance issuers for plan years beginning on or after
August 1, 2013, these final regulations apply to group health plans and
health insurance issuers for plan years beginning on or after January
1, 2014, which is when the majority of plan years begin.6 7
Contemporaneously issued amendments to the HRSA Guidelines implementing
the simplified and clarified religious employer exemption authorized by
45 CFR 147.131(a) of these final regulations will be effective on
August 1, 2013.
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\6\ Section 2713(b) of the PHS Act and the companion provisions
of ERISA and the Code provide that the Secretary shall establish an
interval of not less than one year between when new recommendations
or guidelines under PHS Act section 2713(a) are issued and the first
plan year (in the individual market, policy year) for which coverage
of services addressed in such recommendations or guidelines must be
in effect. Under the 2010 interim final regulations, the requirement
on a non-exempt, non-grandfathered group health plan or group or
individual health insurance policy to cover a newly recommended
preventive service without cost sharing takes effect starting with
the first plan year (in the individual market, policy year) that
begins on or after the date that is one year after the new
recommendation is issued. 26 CFR 54.9815-2713T(b)(1); 29 CFR
2590.715-2713(b)(1); 45 CFR 147.130(b)(1). In the case of
contraceptive services, this 1-year period ended on August 1, 2012,
because the HRSA Guidelines including such services were issued on
August 1, 2011. These final regulations do not alter this effective
date.
\7\ This estimate is based on the Department of Labor's analysis
of Form 5500 data.
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[[Page 39872]]
Two additional guidance documents are being issued
contemporaneously with these final regulations. First, HHS is issuing
guidance extending the temporary safe harbor from enforcement of the
contraceptive coverage requirement by the Departments to encompass plan
years beginning on or after August 1, 2013, and before January 1, 2014.
This guidance continues to include a form to be used by an organization
during this temporary period to self-certify that its plan qualifies
for the temporary enforcement safe harbor. Second, as described in more
detail later in this preamble, HHS and DOL are also issuing a self-
certification form to be executed by an organization seeking to be
treated as an eligible organization for purposes of an accommodation
under these final regulations. This self-certification form is
applicable in conjunction with the accommodations under these final
regulations (that is, for plan years beginning on or after January 1,
2014), after the expiration of the temporary enforcement safe harbor.
II. Overview of the Final Regulations
These final regulations promote two important policy goals. First,
the regulations provide women with access to contraceptive coverage
without cost sharing, thereby advancing the compelling government
interests in safeguarding public health and ensuring that women have
equal access to health care. Second, the regulations advance these
interests in a narrowly tailored fashion that protects certain
nonprofit religious organizations with religious objections to
providing contraceptive coverage from having to contract, arrange, pay,
or refer for such coverage. The regulations finalize the general
approach described in the proposed regulations, with modifications in
response to comments that are intended primarily to simplify
administration of the policy.
Section 2713 of the PHS Act reflects a determination by Congress
that coverage of recommended preventive services without cost sharing
by non-grandfathered group health plans and health insurance coverage
is necessary to achieve access to basic health care for more Americans.
Individuals are more likely to use preventive services if they do not
have to satisfy cost-sharing requirements (such as a copayment,
coinsurance, or a deductible). Use of preventive services results in a
healthier population and reduces health care costs by helping
individuals avoid preventable conditions and receive treatment
earlier.\8\ Further, Congress, by amending the Affordable Care Act
during Senate consideration of the bill to ensure that recommended
preventive services for women would be covered adequately by non-
grandfathered group health plans and health insurance coverage,
recognized that women have unique health care needs.\9\ Such needs
include contraceptive services.\10\
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\8\ Institute of Medicine, Clinical Preventive Services for
Women: Closing the Gaps, Washington, DC: National Academy Press,
2011, at p. 16.
\9\ S.Amdt. 2791 to S.Amdt. 2786 to H.R. 3590 (Service Members
Home Ownership Tax Act of 2009), December 3, 2009.
\10\ Institute of Medicine, Clinical Preventive Services for
Women: Closing the Gaps, Washington. DC: National Academy. Press,
2011, at p. 9; see also Sonfield, A., The Case for Insurance
Coverage of Contraceptive Services and Supplies Without Cost
Sharing, 14 Guttmacher Policy Review. 10 (2011), available at
www.guttmacher.org/pubs/gpr/14/1/gpr140107.html. See also
Congressional Record, S12025 (Dec. 1, 2009), S12114, S12271, S12277
(December 3, 2009) (statements of Senators B. Boxer, D. Feinstein,
A. Franken, and B. Nelson, respectively).
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Some commenters asserted that contraceptive services should not be
considered preventive health services, arguing that they do not prevent
disease and have been shown by some studies to be harmful to women's
health. The HRSA Guidelines are based on recommendations of the
independent Institute of Medicine (IOM), which undertook a review of
the scientific and medical evidence on women's preventive services. As
documented in the IOM report, ``Clinical Preventive Services for Women:
Closing the Gaps,'' women experiencing an unintended pregnancy may not
immediately be aware that they are pregnant, and thus delay prenatal
care. They also may be less motivated to cease behaviors during
pregnancy, such as smoking and consumption of alcohol, that pose
pregnancy-related risks. Studies show a greater risk of preterm birth
and low birth weight among unintended pregnancies.\11\ In addition,
contraceptive use helps women improve birth spacing and therefore avoid
the increased risk of adverse pregnancy outcomes that comes with
pregnancies that are too closely spaced. Short interpregnancy intervals
in particular have been associated with low birth weight, prematurity,
and small-for-gestational age births.\12\ Contraceptives also have
medical benefits for women who are contraindicated for pregnancy, and
there are demonstrated preventive health benefits from contraceptives
relating to conditions other than pregnancy (for example, prevention of
certain cancers, menstrual disorders, and acne).\13\ In addition, by
reducing the number of unintended pregnancies, contraceptives reduce
the number of women seeking abortions.\14\ It is for a woman and her
health care provider in each particular case to weigh any risks against
the benefits in deciding whether to use contraceptive services in
general or any particular contraceptive service.
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\11\ Gipson, J.D., et al., The Effects of Unintended Pregnancy
on Infant, Child and Parental Health: A Review of the Literature,
Studies on Family Planning, 2008, 39(1):18-38.
\12\ Conde-Aguledo, A., et al., Birth Spacing and Risk of
Adverse Perinatal Outcomes--A Meta-Analysis, Journal of the American
Medical Association, 295(15):1809-1823 (2006); see also Zhu, B.,
Effect of Interpregnancy Interval on Birth Outcomes: Findings from
Recent U.S. Studies, International Journal of Gynecology &
Obstetrics, 89:S25-S33 (2005); Fuentes-Afflick, E., & Hessol, N.,
Interpregnancy Interval and the Risk of Premature Infants,
Obstetrics & Gynecology, 95(3):383-390 (2000).
\13\ Institute of Medicine, Clinical Preventive Services for
Women: Closing the Gaps, Washington, DC: National Academy Press,
2011, at p. 107.
\14\ Institute of Medicine, Clinical Preventive Services for
Women: Closing the Gaps, Washington, DC: National Academy Press,
2011, at p. 105. See also, Peipert, J., et al., Preventing
Unintended Pregnancies by Providing No-Cost Contraception,
Obstetrics & Gynecology, 120(6): 1291-1297 (2012); see also
Bongaarts, J., & Westoff, C., The Potential Role of Contraception in
Reducing Abortion, Studies in Family Planning, 31(3): 193-202
(2000).
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Covering contraceptives also yields significant cost savings. A
2000 study estimated that it would cost 15 to 17 percent more not to
provide contraceptive coverage in employee health plans than to provide
such coverage, after accounting for both the direct medical costs of
pregnancy and the indirect costs, such as employee absence.\15\
Consistent with this finding, when contraceptive coverage was added to
the Federal Employees Health Benefits Program, premiums did not
increase because there was no resulting net health care cost
increase.\16\ Specific to public financing of contraceptive services, a
2010 analysis projected that expanding access to family planning
services under Medicaid saves $4.26 for every $1 spent.\17\ Additional
research
[[Page 39873]]
arrived at a similar conclusion and found that, in total, services
provided at publicly funded family planning centers saved $5.1 billion
in 2008.\18\
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\15\ Testimony of Guttmacher Inst., submitted to the Comm. on
Preventive Servs. for Women, Institute of Medicine, January 12,
2012, p. 11, citing Bonoan, R. & Gonen, J.S., Promoting Healthy
Pregnancies: Counseling and Contraception as the First Step,
Washington Business Group on Health, Family Health in Brief, Issue
No. 3. August 2000; see also Sonfield, A., The Case for Insurance
Coverage of Contraceptive Services and Supplies Without Cost
Sharing, 14 Guttmacher Pol'y Rev. 10 (2011); Mavranezouli, I.,
Health Economics of Contraception, 23 Best Practice & Res. Clinical
Obstetrics & Gynecology 187-198 (2009); Trussell, J., et al., Cost
Effectiveness of Contraceptives in the United States, 79
Contraception 5-14 (2009); Trussell, J., The Cost of Unintended
Pregnancy in the United States, 75 Contraception 168-170 (2007).
\16\ Dailard, C., Special Analysis: The Cost of Contraceptive
Insurance Coverage, Guttmacher Rep. on Public Policy (March 2003).
\17\ Sawhill, R., et al., An Ounce of Prevention: Policy
Prescriptions to Reduce the Prevalence of Fragile Families, Future
of Children, 20(2):133-155.
\18\ Frost, J., et al., Contraceptive Needs and Services,
National and State Data, 2008 Update, New York: Guttmacher Institute
(2010).
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Further, the importance of covering contraceptive services has been
recognized by many states, issuers, and employers. Twenty-eight states
now have laws requiring health insurance issuers to cover
contraceptives.\19\ A 2002 study found that more than 89 percent of
insured plans covered contraceptives.\20\ And a 2010 survey of
employers revealed that 85 percent of large employers and 62 percent of
small employers offered coverage of FDA-approved contraceptives, with
another 32 percent of small employers reporting that they did not know
whether they did so.\21\
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\19\ Sonfield, A., et al., U.S. Insurance Coverage of
Contraceptives and the Impact of Contraceptive Coverage Mandates,
Perspectives on Sexual and Reproductive Health 36(2):72-79, 2002.
\20\ Sonfield, A., et al., U.S. Insurance Coverage of
Contraceptives and the Impact of Contraceptive Coverage Mandates,
Perspectives on Sexual and Reproductive Health 36(2):72-79, 2002.
\21\ Claxton, G., et al., Employer Health Benefits: 2010 Annual
Survey, Menlo Park, Cal.: Kaiser Family Found. & Chicago, Illinois:
Health Research & Education Trust, 2010. While many employers
included contraceptive coverage in their group health plans prior to
the Affordable Care Act, the Departments note that the contraceptive
coverage requirement promotes the government's interests with
respect to even these plans' participants and beneficiaries by
ensuring that these plans cover contraceptive services without cost
sharing, a significant financial barrier to such services that was
prevalent before the contraceptive coverage requirement. Institute
of Medicine, Clinical Preventive Services for Women: Closing the
Gaps, Washington, DC: National Academy Press, 2011, at p. 107. See
also Postlethwaite, D., et al., A Comparison of Contraceptive
Procurement Pre- and Post-Benefit Change, 76 Contraception 360
(2007).
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Furthermore, in directing non-grandfathered group health plans and
health insurance coverage to cover preventive services and screenings
for women described in HRSA Guidelines without cost sharing, the
statute acknowledges that both existing health coverage and existing
preventive services recommendations often did not adequately serve the
unique health needs of women. This disparity placed women in the
workforce at a disadvantage compared to their male coworkers. Research
shows that access to contraception improves the social and economic
status of women.\22\ Research also shows that cost sharing can be a
significant barrier to access to contraception.\23\ As IOM noted, women
use preventive services more than men, generating significant out-of-
pocket expenses for women.\24\ Thus, eliminating cost sharing is
particularly critical to addressing the gender disparity of concern
here.
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\22\ Testimony of Guttmacher Institute, submitted to the Comm.
on Preventive Services for Women, Institute of Medicine, January 12,
2012, p. 6, citing Goldin, C. & Katz, L., Career and Marriage in the
Age of the Pill, American Economic Review, 2000, 90(2):461-465;
Goldin, C. & Katz, L.F., The Power of the Pill: Oral Contraceptives
and Women's Career and Marriage Decisions, Journal of Political
Economy, 2002, 110(4):730-770; Bailey, M.J., More Power to the Pill:
The Impact of Contraceptive Freedom on Women's Life Cycle Labor
Supply, Quarterly Journal of Economics, 2006, 121(1):289-320.
\23\ Postlethwaite, D., et al., A Comparison of Contraceptive
Procurement Pre- and Post-Benefit Change, 76 Contraception 360
(2007).
\24\ Institute of Medicine, Clinical Preventive Services for
Women: Closing the Gaps, Washington, DC: National Academy Press,
2011, p. 19.
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The Departments aim to advance these compelling public health and
gender equity interests by providing more women broad access to
recommended preventive services, including contraceptive services,
without cost sharing, while simultaneously protecting certain nonprofit
religious organizations with religious objections to contraceptive
coverage from having to contract, arrange, pay, or refer for such
coverage, as described in these final regulations. Moreover, through
these final regulations, the Departments seek to achieve these goals in
ways that take into account the responsibilities imposed on health
insurance issuers and third party administrators.
A. Amendments to Coverage of Recommended Preventive Health Services--26
CFR 54.9815-2713, 29 CFR 2590.715-2713, 45 CFR 147.130
These sections of the final regulations finalize technical
amendments to the existing preventive services coverage regulations as
proposed. The final regulations amend paragraph (a) of the existing
regulations so that the general requirement to provide coverage for
recommended preventive services without cost sharing is subject to the
religious employer exemption and eligible organization accommodations
discussed later in this section.
The regulations also finalize proposed amendments to paragraph
(a)(1)(iv) of the existing regulations. As amended, the authorization
for HRSA to exempt religious employers from the contraceptive coverage
requirement and the definition of religious employer are now located in
new 45 CFR 147.131(a) of the HHS regulation and incorporated by
reference in the regulations of the Departments of Labor and the
Treasury.
There are no other changes to the provisions of the 2010 interim
final regulations related to providing coverage for recommended
preventive services without cost sharing. Accordingly, consistent with
the general rules for the provision of coverage for recommended
preventive services without cost sharing set forth in the 2010 interim
final regulations, 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 to the extent not
specified in a recommendation or guideline and nothing requires a plan
or issuer that has a network of health care providers to provide
benefits or eliminate cost sharing for items or services that are
delivered out-of-network.\25\
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\25\ See 26 CFR 54.9815-2713T(a)(3) and (4); 29 CFR 2590.715-
2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4). Note, however, if
a plan or issuer does not have in its network a provider who can
provide the particular service, then the plan or issuer must cover
the item or service when performed by an out-of-network provider and
not impose cost sharing with respect to the item or service. See
FAQs About Affordable Care Act Implementation (Part XII), Q3
(February 20, 2013), available at: http://www.dol.gov/ebsa/faqs/faq-aca12.html.
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B. Religious Employer Exemption and Accommodations for Health Coverage
Established or Maintained or Arranged by Eligible Organizations--26 CFR
54.9815-2713A, 29 CFR 2590.715-2713A, 45 CFR 147.131
These sections of the final regulations simplify and clarify the
criteria for the religious employer exemption from the contraceptive
coverage requirement. These sections also establish accommodations with
respect to the contraceptive coverage requirement for group health
plans established or maintained by eligible organizations (and group
health insurance coverage provided in connection with such plans), as
well as student health insurance coverage arranged by eligible
organizations that are institutions of higher education.
1. Religious Employer Exemption
Under the 2012 final regulations, HRSA has the authority to issue
guidelines in a manner that exempts group health plans established or
maintained by religious employers (and group health insurance coverage
provided in connection with such plans) from any requirement to cover
contraceptive services consistent with the HRSA Guidelines that would
otherwise apply. A religious employer was defined for this purpose as
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
[[Page 39874]]
share its religious tenets; and (4) is a nonprofit organization
described in section 6033(a)(1) and 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.
The Departments proposed to simplify and clarify the definition of
religious employer by eliminating the first three prongs and clarifying
the fourth prong of the definition. Under this proposal, an employer
that is organized and operates as a nonprofit entity and is referred to
in section 6033(a)(3)(A)(i) or (iii) of the Code would be considered a
religious employer for purposes of the religious employer exemption.
These proposed amendments were intended to eliminate any question as to
whether group health plans of houses of worship that provide
educational, charitable, or social services to their communities
qualify for the exemption. Specifically, they were intended to ensure
that an otherwise exempt plan is not disqualified because the
employer's purposes extend beyond the inculcation of religious values
or because the employer hires or serves people of different religious
faiths. The Departments also proposed to clarify that, for purposes of
the religious employer exemption, an employer that is organized and
operates as a nonprofit entity is not limited to any particular form of
entity under state law. The Departments reiterate that, under this
standard, it is not necessary to determine the federal tax-exempt
status of the nonprofit entity in determining whether the religious
employer exemption applies.\26\
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\26\ Similarly, whether a nonprofit entity is a religious
employer is determined under this definition without regard to
whether the entity files Form 990 with the IRS.
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The Departments received numerous comments addressing the
definition of religious employer. Some commenters stated that the
proposed definition of religious employer was too narrow and should be
broadened to include all employers, both nonprofit and for-profit, that
have a religious objection to providing contraceptive coverage in their
group health plan. Some commenters requested that the definition of
religious employer be expanded to exempt not only churches and other
houses of worship, but also religiously affiliated hospitals and other
health care organizations and other religiously affiliated ministries
using the concepts of Code section 414(e). Other commenters recommended
that the requirement to cover contraceptive services be rescinded
altogether.
Some commenters stated that the exemption for religious employers
should be eliminated and that religious employers should instead be
subject to the accommodations for eligible organizations so that their
employees may also receive alternative contraceptive coverage without
cost sharing. Other commenters opposed eliminating the first three
prongs of the definition of religious employer, stating that only
churches and other houses of worship that meet the criteria of all of
the prongs should be subject to the exemption. Many commenters agreed
with the Departments that the proposed definition of religious employer
would not materially expand the universe of religious employers, but
others felt that the proposed definition would unduly broaden it.
Based on their review of these comments, the Departments are
finalizing without change the definition of religious employer in the
proposed regulations. As indicated in the preamble to the proposed
regulations (78 FR 8461), the simplified and clarified definition of
religious employer does not expand the universe of religious employers
that qualify for the exemption beyond that which was intended in the
2012 final regulations, but only eliminates any perceived potential
disincentive for religious employers to provide educational,
charitable, and social services to their communities. The Departments
believe that the simplified and clarified definition of religious
employer continues to respect the religious interests of houses of
worship and their integrated auxiliaries in a way that does not
undermine the governmental interests furthered by the contraceptive
coverage requirement. Houses of worship and their integrated
auxiliaries that object to contraceptive coverage on religious grounds
are more likely than other employers to employ people of the same faith
who share the same objection, and who would therefore be less likely
than other people to use contraceptive services even if such services
were covered under their plan.
Contemporaneous with the issuance of these final regulations, HRSA
is issuing amended guidelines implementing the simplified and clarified
religious employer exemption authorized by 45 CFR 147.131(a) of these
final regulations (and incorporated by reference in 26 CFR 54.9815-
2713(a)(1)(iv) and 29 CFR 2590.715-2713(a)(1)(iv)). The amendments to
the guidelines will become effective beginning August 1, 2013.
2. Accommodations for Health Coverage Established or Maintained or
Arranged by Eligible Organizations
In addition to simplifying and clarifying the definition of
religious employer, these final regulations establish accommodations
with respect to the contraceptive coverage requirement for health
coverage established or maintained or arranged by eligible
organizations, as defined in these final regulations. After meeting a
self-certification standard, as described in more detail in this
preamble, nonprofit religious organizations that qualify for these
accommodations are not required to contract, arrange, pay, or refer for
contraceptive coverage; however, plan participants and beneficiaries
(or student enrollees and their covered dependents) will still benefit
from separate payments for contraceptive services without cost sharing
or other charge in accordance with section 2713 of the PHS Act and the
companion provisions of ERISA and the Code. As discussed later in this
section, the accommodations established under these final regulations
do not require the issuance of a separate excepted benefits individual
health insurance policy covering contraceptive services, as set forth
in the proposed regulations, but instead require a simpler method of
providing direct payments for contraceptive services.
a. Definition of Eligible Organization
The final regulations retain the definition of eligible
organization set forth in the proposed regulations. Accordingly, under
these final regulations, an eligible organization is an organization
that: (1) Opposes providing coverage for some or all of the
contraceptive services required to be covered under section 2713 of the
PHS Act and the companion provisions of ERISA and the Code on account
of religious objections; (2) is organized and operates as a nonprofit
entity; (3) holds itself out as a religious organization; and (4) self-
certifies that it satisfies the first three criteria (as discussed in
more detail later in this section).
Some commenters requested that the definition of eligible
organization be broadened to include nonprofit secular employers and
for-profit employers with religious objections to contraceptive
coverage. Other commenters urged that the definition not be extended to
for-profit employers, arguing that for-profit employers should not be
accommodated because their purposes are commercial, not religious.
Additionally, several
[[Page 39875]]
commenters recommended clarifying how an eligible organization would
show that it holds itself out as a religious organization.
Specifically, commenters suggested clarifying that only organizations
that prominently and consistently hold themselves out to the public as
religious organizations may qualify for an accommodation.
The Departments decline to adopt these suggestions. The definition
of eligible organization in these final regulations is the same as that
in the proposed regulations, and is intended to allow health coverage
established or maintained or arranged by various types of nonprofit
religious organizations with religious objections to contraceptive
coverage to qualify for an accommodation. Consistent with religious
accommodations in related areas of federal law, such as the exemption
for religious organizations under Title VII of the Civil Rights Act of
1964, the definition of eligible organization in these final
regulations does not extend to for-profit organizations. The
Departments are unaware of any court granting a religious exemption to
a for-profit organization, and decline to expand the definition of
eligible organization to include for-profit organizations.
b. Self-Certification
Each organization seeking to be treated as an eligible organization
under the final regulations, to avoid contracting, arranging, paying,
or referring for contraceptive coverage, is required to self-certify,
prior to the beginning of the first plan year to which an accommodation
is to apply, that it meets the definition of an eligible
organization.\27\ The self-certification (as described in these final
regulations) needs to be executed once. A copy of the self-
certification needs to be provided to a new health insurance issuer or
a new third party administrator if the eligible organization changes
issuers or third party administrators. Comments addressing this topic
generally approved of the approach proposed by the Departments, but
some commenters suggested that stronger protections were needed to
promote oversight, enforcement, and transparency and to prevent abuse.
For example, some commenters recommended requiring eligible
organizations to file their self-certifications with the Departments
and making such records available to the public. Other commenters
argued that the act of self-certification would infringe on the First
Amendment right of free speech.
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\27\ Although not required to do so by these final regulations,
nothing in these final regulations prevents a religious employer
from drafting and executing a self-certification regarding its
status as a religious employer and sharing the self-certification
with issuers, plan service providers, plan participants or
beneficiaries, or others.
---------------------------------------------------------------------------
The final regulations do not require the self-certification to be
submitted to any of the Departments. An eligible organization must
simply maintain the self-certification (executed by an authorized
representative of the organization) in its records, in a manner
consistent with the record retention requirements under section 107 of
ERISA, and make the self-certification available for examination upon
request. The Departments believe that the requirement to make the self-
certification available for examination upon request appropriately
balances regulators', issuers', third party administrators', and plan
participants and beneficiaries' (and student enrollees and their
covered dependents') interest in verifying compliance and eligible
organizations' interest in avoiding undue inquiry into their character,
mission, or practices. Further, the Departments do not believe that the
self-certification standard infringes on freedom of speech.
The proposed regulations provided that the self-certification would
specify the contraceptive services for which the organization will not
establish, maintain, administer, or fund coverage. The final
regulations eliminate this requirement, pursuant to the standard
exclusion policy discussed later in this section. Further, the final
regulations provide that, if an organization seeks to be treated as an
eligible organization under the final regulations, an issuer or third
party administrator may not require any documentation from the
organization beyond its self-certification as to its status as an
eligible organization. The form to be used for the self-certification
is being finalized contemporaneous with the issuance of these final
regulations through the process provided for under the Paperwork
Reduction Act of 1995.
As discussed previously, the self-certification form is applicable
in conjunction with the accommodations under these final regulations
(that is, for plan years beginning on or after January 1, 2014), after
the expiration of the temporary enforcement safe harbor. The self-
certification standard referenced in these final regulations (and the
form to be executed by an eligible organization to make such self-
certification, which is being issued contemporaneously with these final
regulations) are different from the standard (and the form) associated
with the guidance regarding the extension of the temporary enforcement
safe harbor, which is also being issued contemporaneously with these
final regulations.
c. Separate Payments for Contraceptive Services for Participants and
Beneficiaries in Insured Group Health Plans
The proposed regulations provided, in the case of an insured group
health plan established or maintained by an eligible organization, that
the health insurance issuer providing group coverage in connection with
the plan be required to assume sole responsibility, independent of the
eligible organization and its plan, for providing separate individual
health insurance policies covering contraceptive services for plan
participants and beneficiaries without cost sharing, premium, fee, or
other charge to plan participants or beneficiaries or to the eligible
organization or its plan. Under this proposal, an organization seeking
to be treated as an eligible organization would need only to meet the
self-certification standard. The issuer, in turn, would automatically
enroll plan participants and beneficiaries in separate individual
health insurance policies that cover contraceptive services (and notify
them of such enrollment) without the imposition of any cost-sharing
requirement (such as a copayment, coinsurance, or a deductible),
premium, fee, or other charge on plan participants or beneficiaries or
on the eligible organization or its plan.
Some commenters stated that the Departments should not provide a
tailored accommodation for an eligible organization that objects to
only some types of contraceptive services. These commenters said that
customizing individual contraceptive policies for participants and
beneficiaries (or students enrollees and their covered dependents) in
plans of eligible organizations based on the differing religious
objections to contraceptive coverage of each eligible organization
would create an administrative burden for issuers and confuse plan
participants and beneficiaries (or student enrollees and their covered
dependents). Some commenters also noted that requiring coordination of
benefits might not be feasible, because many states prohibit
coordination between individual and group health insurance coverage.
In response to these comments, the final regulations provide that
an issuer providing payments for contraceptive services in accordance
with these final regulations may use a standard exclusion from a group
health insurance policy that encompasses all recommended contraceptive
services
[[Page 39876]]
and not violate PHS Act section 2713 and the companion provisions of
ERISA and the Code with respect to the requirement to cover
contraceptive services. While issuers may, at their option, choose to
offer customized exclusions from group health insurance policies based
on the differing religious objections to contraceptive coverage of each
eligible organization (or offer several different but standardized
exclusions from group health insurance policies from which eligible
organizations may choose), they are not required to do so under these
final regulations. Regardless of whether an issuer uses a standard or
customized exclusion from a group health insurance policy, plan
participants and beneficiaries (and student enrollees and their covered
dependents) are assured that the issuer will make payments for any
recommended contraceptive services excluded from the group health
insurance policy (or student health insurance coverage).
Some commenters noted that the proposed individual health insurance
policies covering contraceptive services might not be viewed as
enforceable contracts under state contract law because there would be
no premium associated with the coverage and no ability for an
individual to decline coverage. Commenters suggested that states would
need to develop new regulatory processes for reviewing forms and rates
for such policies, and noted that the inability to charge a premium for
such policies could raise actuarial soundness and financial reserve
concerns. Commenters also noted that state laws would prevent issuers
licensed to issue group health insurance policies in one state from
issuing individual health insurance policies to employees of an
eligible organization residing in other states, and expressed concern
about the cost and administrative complexity of issuing and
administering individual contraceptive coverage policies.
These final regulations achieve the same end by requiring that a
health insurance issuer providing group health insurance coverage in
connection with a group health plan established or maintained by an
eligible organization assume sole responsibility for providing separate
payments for contraceptive services directly for plan participants and
beneficiaries, without cost sharing, premium, fee, or other charge to
plan participants or beneficiaries or to the eligible organization or
its plan. The requirement that, for plan participants and
beneficiaries, issuers provide payments for contraceptive services, in
lieu of individual health insurance policies that cover contraceptive
services, represents a simpler approach and responds to concerns raised
by commenters, while still ensuring that eligible organizations and
their plans do not contract, arrange, pay, or refer for such coverage,
and that contraceptive coverage is expressly excluded from the group
health insurance coverage.
Under these final regulations, as under the proposed regulations,
the eligible organization need only meet the self-certification
standard and provide to the issuer a copy of its self-certification.
The issuer that receives the copy of the self-certification from the
eligible organization must expressly exclude contraceptive coverage--
either all contraceptive coverage or coverage of specific contraceptive
services if the issuer chooses to customize the exclusion--from the
group health insurance coverage of the eligible organization. The
issuer must also notify plan participants and beneficiaries,
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, that the issuer provides
payments for contraceptive services at no cost separate from the group
health plan for so long as the participant or beneficiary remains
enrolled in the plan, as discussed later in this section. Unlike under
the proposed regulations, the issuer is not required to issue to plan
participants and beneficiaries individual health insurance policies
covering contraceptive services, and, thus, there is no need to
consider such coverage excepted benefits, as proposed. Instead, under
these final regulations, the issuer must, as a federal regulatory
requirement, provide payments for contraceptive services for plan
participants and beneficiaries, separate from the group health plan,
without the imposition of cost sharing, premium, fee, or other charge
on plan participants or beneficiaries or on the eligible organization
or its plan. Under this simplified approach, issuers will not incur the
associated administrative costs of issuing individual contraceptive
coverage policies.
This simpler approach to the accommodation for insured coverage
does not trigger certain aspects of state insurance law. As the
payments at issue derive solely from a federal regulatory requirement,
not a health insurance policy, they do not implicate issues such as
issuer licensing and product approval requirements under state law, and
they minimize cost and administrative complexity for issuers. At the
same time, because the payments for contraceptive services are not a
group health plan benefit under this approach, this policy ensures that
eligible organizations and their plans do not contract, arrange, pay,
or refer for contraceptive coverage, and that such coverage is
expressly excluded from their group health insurance policies. This
approach also minimizes barriers in access to care because plan
participants and beneficiaries (and their health care providers) do not
have to have two separate health insurance policies (that is, the group
health insurance policy and the individual contraceptive coverage
policy). Furthermore, Small Business Health Insurance Options Programs
(SHOPs) (the small group market Exchanges) do not need to make
operational changes as a result of the accommodation. Small employers
that are eligible organizations purchasing coverage through a SHOP can
simply provide a copy of their self-certification to the issuer (rather
than provide it to the SHOP) to ensure that their small group market
policy is provided in a manner consistent with these final regulations.
Although these payments for contraceptive services are not benefits
under a health insurance policy, to fulfill an issuer's
responsibilities under section 2713 of the PHS Act and the companion
provisions of ERISA and the Code and consistent with the proposed
regulations, an issuer must make them available in a way that meets
minimum standards for consumer protection, which would ordinarily
accompany coverage of recommended preventive health services without
cost sharing under section 2713 of the PHS Act and the companion
provisions of ERISA and the Code. Thus, issuers, in order to satisfy
their regulatory obligations under these final regulations, must make
these payments for contraceptive services in a manner consistent with
the requirements under the following provisions of the PHS Act and the
companion provisions of ERISA and the Code (and their implementing
regulations): PHS Act sections 2706 (non-discrimination in health
care), 2709 (coverage for individuals participating in approved
clinical trials), 2711 (no lifetime or annual limits), 2713 (coverage
of preventive health services), 2719 (appeals process), and 2719A
(patient protections), as incorporated by reference into ERISA section
715 and Code section 9815.\28\ Consistent with
[[Page 39877]]
these standards and as described in the 2010 interim final regulations,
an issuer may apply reasonable medical management techniques and may
require that contraceptive services be obtained in-network (if an
issuer has a network of providers) in order for plan participants and
beneficiaries to obtain such services without cost sharing.\29\
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\28\ With respect to the accommodation for self-insured coverage
of eligible organizations under these final regulations, a
comparable requirement to provide separate payments for
contraceptive services consistent with these consumer protections is
not explicitly placed on the third party administrator. This is
because, as the plan administrator for contraceptive coverage, the
third party administrator is already required to comply with these
consumer protections, as well as all other provisions of ERISA that
are applicable to group health plans, including ERISA sections 104
and 503, and the requirements of Part 7 of ERISA.
\29\ See 26 CFR 54.9815-2713T(a)(3) and (4); 29 CFR 2590.715-
2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4).
---------------------------------------------------------------------------
Issuers are prohibited from charging any premium, fee, or other
charge to eligible organizations or their plans, or to plan
participants or beneficiaries, for making payments for contraceptive
services, and must segregate the premium revenue collected from
eligible organizations from the monies they use to make such payments.
In making such payments, the issuer must ensure that it does not use
any premiums collected from eligible organizations. Issuers have
flexibility in how to structure these payments, provided that the
payments in no way involve the eligible organization, and provided that
issuers are able to account for this segregation of funds in accordance
with applicable, generally accepted accounting and auditing standards.
The Departments stated in the preamble of the proposed regulations
that issuers would find that providing contraceptive coverage is at
least cost neutral because they would be insuring the same set of
individuals under both the group health insurance policies and the
separate individual contraceptive coverage policies and, as a result,
would experience lower costs from improvements in women's health,
healthier timing and spacing of pregnancies, and fewer unplanned
pregnancies. The Departments continue to believe, and have evidence to
support, that, with respect to the accommodation for insured coverage
established under these final regulations, providing payments for
contraceptive services is cost neutral for issuers. Several studies
have estimated that the costs of providing contraceptive coverage are
balanced by cost savings from lower pregnancy-related costs and from
improvements in women's health.30 31 The Departments are
unaware of any studies to the contrary.\32\
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\30\ Bertko, J., Glied, S., et al. The Cost of Covering
Contraceptives Through Health Insurance (February 9, 2012), http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml; Washington
Business Group on Health, Promoting Healthy Pregnancies: Counseling
and Contraception as the First Step, Report of a Consultation with
Business and Health Leader (September 20, 2000), http://www.businessgrouphealth.org/pdfs/healthypregnancy.pdf; Campbell,
K.P., Investing in Maternal and Child Health: An Employer's Toolkit,
National Business Group on Health http://www.businessgrouphealth.org/healthtopics/maternalchild/investing/docs/mch_toolkit.pdf; Trussell, J., et al. The Economic Value of
Contraception: A Comparison of 15 Methods, American Journal Public
Health, 1995; 85(4):494-503, Revenues of H.R. 3162, the Children's
Health and Medicare Protection Act, for the Rules Committee (August
1, 2007) http://www.cbo.gov/ftpdocs/85xx/doc8519/HR3162.pdf.
\31\ The Departments believe that these same cost savings found
by issuers of group health insurance would also be found by issuers
of student health insurance coverage.
\32\ One commenter cited two studies disputing the cost
effectiveness of preventive health services, but these studies are
not specific to contraceptive services. Further, these studies find
that preventive care is not cost effective when a large population
receives the preventive service but only a small fraction of that
population would have developed the condition being prevented, a
circumstance not presented here. See Cohen, J., et al., New England
Journal of Medicine. 2008, 358:661-663 (February 14, 2008) http://www.nejm.org/toc/nejm/358/7; CBO Letter to Congressman Nathan Deal,
(August 7, 2009). http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/104xx/doc10492/08-07-prevention.pdf.
---------------------------------------------------------------------------
Some commenters raised specific premium rating and accounting
issues related to the proposed regulations' approach to the cost
neutrality of issuers providing contraceptive coverage. These
commenters generally asserted that the cost savings due to lower
pregnancy-related costs and improvements in women's health would flow
to employers through reduced premiums, thereby leaving issuers
uncompensated for the cost of providing contraceptive coverage.
Further, commenters stated that, in the case of a group health
insurance policy in the small group market, the small employer's
reduced claims experience attributable to contraceptive coverage (not
including the issuer's direct costs of contraceptive coverage) would be
spread across the issuer's single risk pool for the entire small group
market in a state and result in a lower index rate for pricing all of
the issuer's small group market products. Thus, according to these
commenters, in both the large and small group markets, issuers would
not reap the cost savings attributable to contraceptive coverage, and
would need to fund the costs of a free-standing contraceptive coverage
policy from some other source.
One commenter suggested that it would be possible to view the
provision of contraceptive coverage as cost neutral if an issuer were
to set the premium otherwise charged to an eligible organization as
though plan participants and beneficiaries did not have separate
contraceptive coverage. Other commenters argued that the rationale for
providing Federally-facilitated Exchange (FFE) user fee adjustments in
connection with the accommodation for self-insured group health plans
of eligible organizations was equally applicable in the context of
insured group health plans of eligible organizations and recommended
that issuers be permitted to charge a premium or otherwise be
compensated for providing contraceptive coverage.
In response to these comments, the Departments continue to believe
that issuers have various options for achieving cost neutrality,
notwithstanding that they must make payments for contraceptive services
without cost sharing, premium, fee, or other charge to the eligible
organization, the group health plan, or plan participants or
beneficiaries.
Issuers of large group insured products have an option by which
they can ensure that they accrue the cost savings from reduced
pregnancy-related expenses and other health care costs. For large group
market products, issuers base premiums on an employer's prior year
claims cost (that is, experience rating) and other factors.\33\ Some
commenters asserted that this rating practice means that any cost
savings from fewer pregnancies and childbirths and improvements in
women's health will be passed to the employer in the large group
insured market. Given that there appears to be no legal requirement
that issuers use this particular rating practice, and that this
practice often entails adding costs to premiums that are not based
solely on the experience of the employer's group,\34\ issuers
reasonably could set the premium for an eligible organization's large
group policy as if no payments for contraceptive services had been
provided to plan participants and beneficiaries--reflecting the actual
terms of the group policy, which expressly excludes contraceptive
coverage. This approach would be consistent with pricing methodologies
currently used in the health insurance industry.
---------------------------------------------------------------------------
\33\ http://www.nahu.org/consumer/GroupInsurance.cfm.
\34\ http://www.actuary.org/files/Draft_Large_Group_Medical_Business_Practice_Note_Jan_2013.pdf.
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[[Page 39878]]
Another option is to treat the cost of payments for contraceptive
services for women enrolled in insured group health plans established
or maintained by eligible organizations as an administrative cost that
is spread across the issuer's entire risk pool, excluding plans
established or maintained by eligible organizations given that issuers
are prohibited from charging any premium, fee, or other charge to
eligible organizations or their plans for providing payments for
contraceptive services. In the small group market, issuers are required
beginning in 2014 to treat all of their non-grandfathered business
within a state as a single risk pool, and administrative costs may be
spread evenly across all plans in the single risk pool (although
issuers are permitted to apply them on a plan basis). In the large
group market, while there is no single risk pool requirement, issuers
generally spread administrative costs across their entire book of
business.\35\ In 2011, health insurance issuers earned approximately
$290 billion in premiums in the insured small and large group
markets.\36\ If the cost of providing payments for contraceptive
services for participants and beneficiaries in insured group health
plans established or maintained by eligible organizations were treated
as an administrative cost spread across an issuer's entire book of
business (excluding plans established or maintained by eligible
organizations), the cost of providing such payments would result in an
imperceptible increase in administrative load.\37\ These changes in
premiums would be negligible and effectively cost neutral to issuers,
even before considering any reductions in claims costs that accrue to
the issuer.
---------------------------------------------------------------------------
\35\ Bluhm, W., ed., Group Insurance, 5th Ed. 2007), 459-460.
\36\ 2011 MLR-A data, submitted to CMS in July 2012.
\37\ Office of Assistant Secretary for Planning and Evaluation,
U.S. Department of Health and Human Services, ``Cost-Neutrality of
Contraceptive Coverage.''
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Under either option, after meeting the self-certification standard,
the eligible organization would not contract, arrange, pay, or refer
for contraceptive coverage.
HHS intends to clarify in guidance that an issuer of group health
insurance coverage that makes payments for contraceptive services under
these final regulations may treat those payments as an adjustment to
claims costs for purposes of medical loss ratio and risk corridor
program calculations.\38\ This adjustment compensates for any increase
in incurred claims associated with making payments for contraceptive
services.
---------------------------------------------------------------------------
\38\ See 45 CFR Part 158 for standards related to the medical
loss ratio and 45 CFR Part 153 Subpart F for standards related to
the risk corridor program.
---------------------------------------------------------------------------
Several commenters expressed concern that participants and
beneficiaries in plans of eligible organizations would be automatically
enrolled in individual contraceptive coverage policies and recommended
providing an opt-out for plan participants and beneficiaries who object
to contraceptive coverage on religious grounds. Other commenters stated
that allowing participants and beneficiaries to opt out of such
contraceptive coverage would create an administrative burden on issuers
and privacy concerns for individuals because the issuers would know
which individuals opted in or opted out of such coverage. The
simplified approach described in these final regulations eliminates
this issue altogether, because issuers are not required to issue
individual contraceptive coverage policies at all.\39\ Rather, they are
required only to provide payments for contraceptive services for those
plan participants and beneficiaries who opt to use such services.
Nothing in these final regulations compels any plan participant or
beneficiary to use such services, and nothing causes participants or
beneficiaries to be automatically enrolled in contraceptive coverage;
therefore, these concerns are addressed without the need for an opt-out
mechanism. Moreover, nothing in these final regulations precludes
employers or others from expressing any opposition to the use of
contraceptives or requires health care providers to prescribe or
provide contraceptives, if doing so is against their religious beliefs.
---------------------------------------------------------------------------
\39\ The same is true with respect to the accommodation for
self-insured coverage of eligible organizations under these final
regulations, given that third party administrators similarly are not
required to arrange for individual contraceptive coverage policies
at all.
---------------------------------------------------------------------------
The Departments explained in the preamble of the proposed
regulations that a health insurance issuer providing group health
insurance coverage in connection with a group health plan established
or maintained by an eligible organization would be held harmless if the
issuer relied in good faith on a representation by the organization as
to its eligibility for the accommodation and such representation was
later determined to be incorrect. The Departments also explained that
an eligible organization and its plan would be held harmless if the
issuer were to fail to comply with the requirement to provide separate
payments for contraceptive services for plan participants and
beneficiaries at no cost. Some commenters requested that the
Departments codify this policy in regulation text. Accordingly, this
policy is now codified in paragraph (e) of 26 CFR 54.9815-2713A, 29 CFR
2590.715-2713A, and 45 CFR 147.131 of these final regulations.
To summarize, the following are the key elements of the
accommodation that is being made for eligible organizations with
insured group health plans:
An organization seeking to be treated as an eligible
organization needs only to self-certify that it is an eligible
organization, provide the issuer with a copy of the self-certification,
and satisfy the recordkeeping and inspection requirements of the self-
certification standard.
The issuer that receives a self-certification must then
expressly exclude contraceptive coverage from the eligible
organization's group health insurance coverage.
The issuer must, 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, notify plan participants and beneficiaries that the issuer
provides separate payments for contraceptive services at no cost for so
long as the participant or beneficiary remains enrolled in the plan.
The issuer must segregate premium revenue collected from
the eligible organization from the monies used to make payments for
contraceptive services. When it makes payments for contraceptive
services used by plan participants and beneficiaries, the issuer must
do so without imposing any premium, fee, or other charge, or any
portion thereof, directly or indirectly, on the eligible organization,
its group health plan, or its plan participants or beneficiaries. In
making such payments, the issuer must ensure that it does not use any
premiums collected from eligible organizations. Issuers have
flexibility in how to structure these payments, but must be able to
account for this segregation of funds, subject to applicable, generally
accepted accounting and auditing standards. Thus, an eligible
organization need not contract, arrange, pay or refer for contraceptive
coverage.
[[Page 39879]]
Plan participants and beneficiaries may refuse to use
contraceptive services.
An eligible organization and its group health plan are
considered to comply with the contraceptive coverage requirement even
if the issuer fails to comply with the requirement to provide separate
payments for contraceptive services for plan participants and
beneficiaries at no cost.
d. Separate Payments for Contraceptive Services for Participants and
Beneficiaries in Self-Insured Group Health Plans
Comments varied as to which of the three proposed approaches to
providing separate contraceptive coverage without cost sharing for
participants and beneficiaries in self-insured plans of eligible
organizations should be finalized. Some commenters suggested that none
of the proposed approaches would enable objecting employers to separate
themselves completely from the administration of contraceptive
coverage. These commenters requested an unqualified exemption from the
contraceptive coverage requirement for such employers. Other commenters
stated that none of the proposed approaches would sufficiently ensure
that participants and beneficiaries in self-insured plans of eligible
organizations would receive separate contraceptive coverage without
cost sharing. These commenters requested that the final regulations
require that objecting employers retain legal responsibility for any
failure on the part of issuers or third party administrators to provide
such coverage.
A number of commenters expressed concern about the responsibilities
that one or more of the proposed approaches would impose on third party
administrators. Some of these commenters suggested that the proposed
requirement that third party administrators arrange for separate
contraceptive-only coverage through an issuer would convert third party
administrators into health insurance brokers. Others suggested that
third party administrators would not be willing to assume the
responsibility of arranging for separate contraceptive-only coverage.
These commenters also suggested that, even if a third party
administrator were willing to assume such responsibility, it would pass
along the resultant increase in its administrative costs to the
employer.
Other commenters expressed concern about an approach that would
require third party administrators to become plan administrators and
fiduciaries under section 3(16) of ERISA for the sole purpose of
arranging contraceptive coverage. These commenters suggested that
requiring third party administrators to serve as fiduciaries would
increase their exposure to legal liability and also create conflicts of
interest with their plan sponsor clients given that many agreements
between third party administrators and plan sponsors prohibit third
party administrators from serving as fiduciaries.
A number of commenters questioned the Department of Labor's legal
authority to designate a third party administrator as the plan
administrator for contraceptive coverage by virtue of the eligible
organization providing a copy of its self-certification to the third
party administrator. These commenters suggested that the self-
certification of the eligibility of the organization for the
accommodation would be insufficient to act as a designation under ERISA
section 3(16)(A)(i), and questioned whether the self-certification
could be defined as an instrument under which the plan is operated.
After reviewing the comments on the three proposed approaches, the
Departments are finalizing the third approach under which the third
party administrator becomes an ERISA section 3(16) plan administrator
and claims administrator solely for the purpose of providing payments
for contraceptive services for participants and beneficiaries in a
self-insured plan of an eligible organization at no cost to plan
participants or beneficiaries or to the eligible organization. The
Departments have determined that the ERISA section 3(16) approach most
effectively enables eligible organizations to avoid contracting,
arranging, paying, or referring for contraceptive coverage after
meeting the self-certification standard, while also creating the fewest
barriers to or delays in plan participants and beneficiaries obtaining
contraceptive services without cost sharing.
Under this approach, as set forth in these final regulations, with
respect to the contraceptive coverage requirement, an eligible
organization is considered to comply with section 2713 of the PHS Act
and the companion provisions in ERISA and the Code if it provides to
all third party administrators with which it or its plan has contracted
a copy of its self-certification, consistent with the requirements of
these final regulations.\40\ The self-certification must: (1) State
that the eligible organization will not act as the plan administrator
or claims administrator with respect to contraceptive services or
contribute to the funding of contraceptive services; and (2) cite 29
CFR 2510.3-16 and 26 CFR 54.9815-2713A and 29 CFR 2590.715-2713A, which
explain the obligations of the third party administrator. Upon receipt
of the copy of the self-certification, the third party administrator
may decide not to enter into, or remain in, a contractual relationship
with the eligible organization to provide administrative services for
the plan.
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\40\ Third party administrators are hired by plan sponsors to
process claims and administer other administrative aspects of
employee benefit plans. In some cases, a plan hires different third
party administrator to administer claims for different
classifications of benefits. (For example, one plan may contract
with a pharmacy benefit manager (PBM) to handle claims
administration for prescription drugs and another third party
administrator to handle claims for inpatient and outpatient medical/
surgical benefits.) To the extent the plan hires more than one third
party administrator, each third party administrator would become the
section 3(16) plan administrator with respect to the types of claims
it normally processes (that is, the PBM would continue to handle
claims for prescription drugs and the other third party
administrator would continue to handle claims for inpatient and
outpatient medical/surgical benefits); each would do so in
accordance with section 2713 of the PHS Act and the companion
provisions of ERISA and the Code (even if plan terms might otherwise
provide differently) as plan administration that may be funded in
accordance with 45 CFR 156.50(d).
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As relevant here, a plan administrator is defined in ERISA section
3(16)(A)(i) as ``the person specifically so designated by the terms of
the instrument under which the plan is operated.'' As a document
notifying the third party administrator(s) that the eligible
organization will not provide, fund, or administer payments for
contraceptive services, the self-certification is one of the
instruments under which the employer's plan is operated under ERISA
section 3(16)(A)(i). The self-certification will afford the third party
administrator notice of obligations set forth in these final
regulations, and will be treated as a designation of the third party
administrator(s) as plan administrator and claims administrator for
contraceptive benefits pursuant to section 3(16) of ERISA. Additional
conditions the eligible organization must meet in order to be
considered to comply with PHS Act section 2713 and the companion
provisions in ERISA and the Code include prohibitions on: (1) Directly
or indirectly interfering with a third party administrator's efforts to
provide or arrange separate payments for contraceptive services for
participants or beneficiaries in the plan and (2) directly or
indirectly seeking to influence a third party administrator's
[[Page 39880]]
decision to provide or arrange such payments.\41\
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\41\ Nothing in these final regulations prohibits an eligible
organization from expressing its opposition to the use of
contraceptives.
---------------------------------------------------------------------------
A third party administrator that receives a copy of the self-
certification and that agrees to enter into or remain in a contractual
relationship with the eligible organization to provide administrative
services for the plan must provide or arrange separate payments for
contraceptive services for participants and beneficiaries in the plan
without cost sharing, premium, fee, or other charge to plan
participants or beneficiaries, or to the eligible organization or its
plan. The third party administrator can provide such payments on its
own, or it can arrange for an issuer or other entity to provide such
payments. In either case, like the payments for contraceptive services
under the accommodation for insured plans of eligible organizations
discussed previously, the payments are not health insurance policies.
Moreover, in either case, the third party administrator can make
arrangements with an issuer offering coverage through an FFE to obtain
reimbursement for its costs (including an allowance for administrative
costs and margin). As discussed later in this section, the issuer
offering coverage through the FFE can receive an adjustment to the FFE
user fee, and the issuer is required to pass on a portion of that
adjustment to the third party administrator to account for the costs of
providing or arranging payments for contraceptive services. A third
party administrator that provides or arranges the payments is entitled
to retain reimbursement for its costs for the period during which it
reasonably and in good faith relied on a representation by the eligible
organization that it was eligible for the accommodation. This is so
even if the organization's representation was later determined to be
incorrect.
The third party administrator must provide plan participants and
beneficiaries with notice of the availability of the 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 coverage that is
effective beginning on the first day of each applicable plan year (as
discussed in more detail later in this section). Third party
administrators must also take on the statutory responsibilities of a
plan administrator under ERISA, including setting up and operating a
claims procedure under ERISA section 503, providing plan participants
and beneficiaries with disclosures required under ERISA section 104,
and complying with the requirements of Part 7 of ERISA. The Departments
note that there is no obligation for a third party administrator to
enter into or remain in a contract with the eligible organization if it
objects to any of these responsibilities.
The Departments believe that this approach most successfully
addresses both the desire of some commenters for plan participants and
beneficiaries to receive contraceptive coverage without cost sharing
without delays or other barriers, and the desire of other commenters
for objecting employers to be separated from contracting, arranging,
paying, or referring for contraceptive coverage. The third party
administrator serving as the plan administrator for contraceptive
benefits ensures that there is a party with legal authority to arrange
for payments for contraceptive services and administer claims in
accordance with ERISA's protections for plan participants and
beneficiaries. At the same time, the approach enables objecting
employers, after providing third party administrators with a copy of
the self-certification (as described previously), to separate
themselves from contracting, arranging, paying, or referring for
contraceptive coverage. Additionally, by substituting payments for
contraceptive services for health insurance policies, this approach
avoids the complications that would be presented by requiring the
creation of a contraceptive-only health insurance product, and allows
third party administrators to avoid potentially becoming health
insurance brokers. Accordingly, while the Departments appreciate
commenters' concerns about the responsibilities that third party
administrators must assume under this accommodation, they believe that
this approach best ensures that plan participants and beneficiaries
receive contraceptive coverage without cost sharing, and without the
objecting employers paying for or administering such coverage.
Moreover, none of the comments changed the Department of Labor's
view that it has legal authority to require the third party
administrator to become the plan administrator under ERISA section
3(16) for the sole purpose of providing payments for contraceptive
services if the third party administrator agrees to enter into or
remain in a contractual relationship with the eligible organization to
provide administrative services for the plan. The Department of Labor
has broad rulemaking authority under Title I of ERISA, which includes
the ability to interpret the definition of plan administrator under
ERISA section 3(16)(A)(i). The Department of Labor's interpretation of
the self-certification described herein as one of the ``instruments
under which the plan is operated'' is consistent with the plain meaning
of the term because it identifies the limited set of plan benefits
(that is, contraceptive coverage) that the employer refuses to provide
and that the third party administrator must therefore provide or
arrange for an issuer or another entity to provide.
e. Self-Insured Group Health Plans Without Third Party Administrators
Although some commenters addressed the solicitation for comments on
whether and how to provide an accommodation for self-insured group
health plans established or maintained by eligible organizations that
do not use the services of a third party administrator, no comments
indicated that such plans actually exist. Accordingly, the Departments
continue to believe that there are no self-insured group health plans
in this circumstance. However, to allow for the possibility that such a
self-insured group health plan does exist, the Departments will provide
any such plan with a safe harbor from enforcement of the contraceptive
coverage requirement, contingent on: (1) the plan submitting to HHS
information (as described later in this section) showing that it does
not use the services of a third party administrator; and (2) if HHS
agrees that the plan does not use the services of a third party
administrator, the plan providing notice to plan participants and
beneficiaries in any application materials distributed in connection
with enrollment (or re-enrollment) in coverage that is effective
beginning on the first day of each applicable plan year, indicating
that it does not provide benefits for contraceptive services.
Such plans must submit to HHS at least 60 days prior to the first
day of the first applicable plan year all of the following information:
Identifying information for the plan, the eligible
organization that acts as the plan sponsor, and an authorized
representative of the organization, along with the authorized
representative's telephone number and email address.
A listing of the five most highly compensated non-clinical
plan service providers (other than employees of the plan or plan
sponsor), including contact information for each plan service provider,
a concise description of the nature of the services provided by each
service provider to the plan, and the annual amount of compensation
paid to
[[Page 39881]]
each plan service provider (examples of plan services include claims
processing and adjudication, appeals management, provider network
development, and pharmacy benefit management).
An attestation (executed by an authorized representative
of the organization) that the plan is established or maintained by an
eligible organization, and is operated in compliance with all
applicable requirements of part A of title XXVII of the PHS Act, as
incorporated into ERISA and the Code.
Such information must be submitted electronically to
[email protected].
If any such submission demonstrates that a self-insured group
health plan established or maintained by an eligible organization does
not use the services of a third party administrator, the Departments
will provide a safe harbor from enforcement of the contraceptive
coverage requirement while an additional accommodation is considered.
If the Departments discover through any such submission that a self-
insured group health plan established or maintained by an eligible
organization does in fact use the services of a third party
administrator, the eligible organization must either follow the
procedures described in these final regulations to obtain an
accommodation or otherwise comply with the contraceptive coverage
requirement.
f. Notice of Availability of Separate Payments for Contraceptive
Services
Consistent with the proposed regulations, the final regulations
direct that, for any plan year to which an accommodation is to apply, a
health insurance issuer providing separate payments for contraceptive
services pursuant to the accommodation, or a third party administrator
arranging or providing such payments (or its agent), must provide
timely written notice about this fact to plan participants and
beneficiaries in insured or self-insured group health plans (or student
enrollees and their covered dependents in student health insurance
coverage) of eligible organizations.
Under the proposed regulations, this notice would be provided by
the issuer contemporaneous with (to the extent possible) but separate
from any application materials distributed in connection with
enrollment (or re-enrollment) in health coverage established or
maintained or arranged by the eligible organization. Commenters noted
that employers, not issuers, typically distribute plan enrollment (or
re-enrollment) materials to employees and that providing this notice
contemporaneous with plan enrollment (or re-enrollment) materials would
not be possible because issuers typically do not receive enrollee
information prior to enrollment.
Consistent with the simplified approach described previously, these
final regulations provide that this notice must be provided by either
the issuer providing separate payments for contraceptive services under
the accommodation, or a third party administrator arranging or
providing such payments (or its agent). The notice must be provided
contemporaneous with (to the extent possible), but separate from, any
application materials distributed in connection with enrollment (or re-
enrollment) in coverage that is effective beginning on the first day of
each plan year to which the accommodation applies, and it must indicate
that the eligible organization does not fund or administer
contraceptive benefits, but that the issuer or third party
administrator will provide separate payments for contraceptive services
at no cost. The Departments believe that the direction that the notice
be provided contemporaneous with application materials ``to the extent
possible'' provides sufficient flexibility to address the concerns
raised by commenters about the timing of the notice.
The final regulations continue to provide model language that may
be used to satisfy this notice requirement. Substantially similar
language may also be used to satisfy the notice requirement. Some
commenters suggested additions or modifications to the model language.
Other commenters stated that the Departments should not allow the use
of substantially similar language. Additionally, some commenters
recommended the Departments set standards to ensure that the notice is
accessible to persons with limited English proficiency and person with
disabilities. The Departments believe that the model language in the
final regulations, along with existing guidance concerning civil rights
obligations, provide sufficient notice. The Departments also believe
that the flexibility afforded by the final regulations to use
substantially similar language is generally consistent with other
federal notice requirements.
The notice must include contact information for the issuer or third
party administrator in the event plan participants and beneficiaries
(or student enrollees and their covered dependents) have questions or
complaints. The Departments note that issuers and third party
administrators may find it useful to provide additional written
information concerning how to obtain reimbursement for contraceptive
services, appeals procedures, provider and pharmacy networks,
prescription drug formularies, medical management procedures, and
similar issues.\42\
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\42\ Furthermore, as discussed previously, with respect to self-
insured coverage, third party administrators that are plan
administrators must operate in accordance with Part 1 of ERISA,
including ERISA section 104, which generally requires certain
disclosures regarding plan benefits and limitations.
---------------------------------------------------------------------------
g. Student Health Insurance Coverage
Consistent with the HHS proposed regulation, paragraph (f) of the
HHS final regulation provides that an accommodation applies to student
health insurance coverage arranged by an eligible organization that is
an institution of higher education in a manner comparable to that in
which it applies to group health insurance coverage provided in
connection with a group health plan established or maintained by an
eligible organization that is an employer. For this purpose, any
reference to plan participants and beneficiaries is a reference to
student enrollees and their covered dependents.
Several commenters supported treating student health insurance like
employer-sponsored group health insurance for purposes of these final
regulations. Other commenters suggested that an accommodation should
not extend to institutions of higher education that arrange student
health insurance coverage, because student health insurance coverage is
considered a type of individual rather than group health insurance
coverage under federal law.\43\ One commenter recommended that issuers
offering coverage through the Exchanges be required to provide separate
contraceptive coverage at no cost to students enrolled in nonprofit
religious institutions of higher education with religious objections to
contraceptive coverage (and their dependents).
---------------------------------------------------------------------------
\43\ 45 CFR 147.147 (77 FR 16453).
---------------------------------------------------------------------------
Student health insurance coverage is administered differently than
other individual health insurance coverage. Whereas most individual
health insurance coverage is issued under a contract between an
individual policyholder and a health insurance issuer, student health
insurance coverage is available to student enrollees and their covered
dependents pursuant to a written agreement between an institution of
higher education and a health insurance issuer. Some religiously
affiliated colleges and universities object to signing a written
agreement or providing financial
[[Page 39882]]
assistance for student health insurance coverage that provides benefits
for contraceptive services. For these reasons, HHS believes that it is
appropriate to take into account religious objections to contraceptive
coverage of eligible organizations that are institutions of higher
education and is finalizing the provision applicable to student health
insurance coverage as proposed. HHS notes that it does not have the
authority to require issuers offering coverage through the Exchanges to
provide separate contraceptive coverage at no cost to students (and
their dependents).
The Departments note that any accommodation specific to a nonprofit
religious institution of higher education is intended to accommodate
the nonprofit religious institution of higher education only with
respect to its arrangement of student health insurance coverage for its
students and their covered dependents. With respect to the
establishment or maintenance of a group health plan by a nonprofit
religious institution of higher education for its employees and their
dependents, the nonprofit religious institution of higher education is
intended to be accommodated in the same manner as that in which any
other eligible organization that has established or maintained a group
health plan for its employees and their dependents is to be
accommodated.
C. Adjustments of Federally-Facilitated Exchange User Fees--45 CFR
156.50(d) and 156.80(d)
These sections of the final HHS regulation set forth processes and
standards to fund the payments for the contraceptive services that are
provided for participants and beneficiaries in self-insured plans of
eligible organizations under the accommodation described previously, at
no cost to plan participants or beneficiaries, eligible organizations,
third party administrators, or issuers, through an adjustment in the
FFE user fee payable by an issuer participating in an FFE.\44\
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\44\ The FFE user fee was established in the March 11, 2013
final rule entitled ``Patient Protection and Affordable Care Act;
HHS Notice of Benefit and Payment Parameters for 2014'' (78 FR
15410) (2014 Payment Notice).
---------------------------------------------------------------------------
In response to the proposed regulations, some commenters questioned
HHS's authority to establish the FFE user fee adjustment. Commenters
also recommended that HHS ensure that the adjustments to user fee
collections not undermine FFE operations. Commenters stated that the
FFE user fee should not be increased to offset the user fee adjustment.
Commenters further stated that the FFE user fee adjustment must be
adequate to provide financial incentives to ensure that women in self-
insured plans of eligible organizations receive contraceptive coverage
at no cost. Commenters suggested that the FFE user fee adjustment may
not be an adequate long-term funding source as more states establish
Exchanges over time, reducing the number of FFEs and therefore
available FFE user fee revenue.
Office of Management and Budget (OMB) Circular No. A-25R
establishes federal policy regarding these types of user fees.
Consistent with that Circular, the revised FFE user fee calculation
(which will result in an adjustment of the FFE user fee) will
facilitate the accommodation of self-insured plans established or
maintained by eligible organizations by ensuring that plan participants
and beneficiaries are provided contraceptive coverage at no cost so
that eligible organizations are not required to administer or fund such
coverage. By financing the accommodation for self-insured plans of
eligible organizations through the FFE user fee adjustment,
participants and beneficiaries in such plans can retain their existing
coverage, while gaining access to separate payments for contraceptive
services at no cost. HHS does not believe that the adjustment to FFE
user fee collections, as contemplated under this final regulation, will
materially undermine FFE operations.
HHS notes that it is not raising the FFE user fee finalized in the
2014 Payment Notice to offset the FFE user fee adjustments, and
estimates that payments for contraceptive services will represent only
a small portion of total FFE user fees.
The FFE user fee adjustments support many of the goals of the
Affordable Care Act, including improving the health of the population,
reducing health care costs, providing access to health coverage,
encouraging eligible organizations to continue to offer health
coverage, and ensuring access to affordable qualified health plans
(QHPs) via efficiently operated Exchanges. Moreover, as described
earlier in these final regulations, there are significant benefits
associated with contraceptive coverage without cost sharing. Such
coverage significantly furthers the governmental interests in promoting
public health and gender equality, and promotes the underlying goals of
the Exchanges and the Affordable Care Act more generally.
In Sec. 156.50(d) of the proposed regulations, HHS specified that,
if an issuer were to provide contraceptive coverage to participants and
beneficiaries in self-insured plans of eligible organizations at no
cost, and the issuer offers coverage through an FFE, the issuer would
be able to seek an adjustment to the FFE user fee for the estimated
cost of the contraceptive coverage. Moreover, HHS proposed that, if the
issuer providing the contraceptive coverage did not offer coverage
through an FFE--either because it was not a QHP issuer, or because it
was a QHP issuer but operated in a state without an FFE--an issuer in
the same issuer group that offered coverage through an FFE would have
been able to seek an adjustment to the FFE user fee on behalf of the
issuer providing the contraceptive coverage. HHS proposed to use the
definition of issuer group in 45 CFR 156.20, that is, all entities
treated under subsection (a) or (b) of section 52 of the Code as a
member of the same controlled group of corporations as (or under common
control with) a health insurance issuer, or issuers affiliated by the
common use of a nationally licensed service mark. Several commenters
expressed concern that not every issuer seeking to provide
contraceptive coverage to participants and beneficiaries in self-
insured plans of eligible organizations would be in the same issuer
group as an issuer that offers coverage through an FFE. Commenters
further noted that, even if the issuer providing the contraceptive
coverage and the issuer offering coverage through an FFE were in the
same issuer group, the issuers might incur significant administrative
costs in establishing the necessary arrangements.
In response to these comments, and to account for the payments for
contraceptive services for participants and beneficiaries in self-
insured group health plans of eligible organizations under the
accommodation described previously, HHS is finalizing a modification of
the proposed policy. In Sec. 156.50(d)(1), a participating issuer
(defined at 45 CFR 156.50(a) \45\) offering a plan through an FFE may
qualify for an adjustment to the FFE user fee to the extent that the
participating issuer either: (i) made payments for contraceptive
services on behalf of a third party administrator pursuant to 26 CFR
54.9815-2713A(b)(2)(ii) or 29 CFR 2590.715-2713A(b)(2)(ii); or (ii)
seeks an adjustment to the FFE user fee with respect to a third party
administrator
[[Page 39883]]
that, following receipt of a copy of the self-certification referenced
in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4), made or
arranged for payments for contraceptive services pursuant to 26 CFR
54.9815-2713A(b)(2)(i) or (ii) or 29 CFR 2590.715-2713A(b)(2)(i) or
(ii). Under the final regulation, neither the third party
administrator, nor the participating issuer, nor any entity providing
payments for contraceptive services (if neither the third party
administrator nor the participating issuer is providing such payments)
is required to be part of the same issuer group or otherwise
affiliated. This modification allows greater flexibility in the
arrangements among third party administrators, issuers, and other
entities, while still ensuring that eligible organizations are not
required to contract, arrange, pay, or refer for contraceptive
coverage. Consistent with the proposed regulations, an allowance for
administrative costs and margin in the FFE user fee adjustment accounts
for the costs of arrangements among the third party administrator, the
participating issuer, and any other entity providing payments for
contraceptive services (if neither the third party administrator nor
the participating issuer is providing such payments).
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\45\ Under 45 CFR 156.50(a), a participating issuer includes QHP
issuers, issuers of multi-state plans, and issuers of stand-alone
dental plans. We note that an issuer of a Consumer Operated and
Oriented Plan (CO-OP) offered on an FFE is also considered to be a
participating issuer for the purpose of the FFE user fee adjustment.
---------------------------------------------------------------------------
In Sec. 156.50(d)(1) through (4) of the proposed regulations, HHS
set forth a process through which an issuer seeking an FFE user fee
adjustment would submit information to HHS to demonstrate the provision
of contraceptive coverage and estimate the cost of such coverage. HHS
further proposed that it would review this information and provide an
adjustment to the issuer's monthly obligation to pay the FFE user fee
in an amount equal to the approved estimated cost of the contraceptive
coverage. HHS suggested that the cost of the contraceptive coverage,
including administrative costs and margin, could be estimated on a per
capita basis by either the issuer or HHS using either actuarial
principles and methodologies or, for 2016 and beyond, previous
experience. The per capita rate would then be multiplied by the monthly
enrollment in the contraceptive coverage in order to calculate the
total FFE user fee adjustment.
HHS sought comments on this proposed process for collecting
information, calculating the cost of the contraceptive coverage, and
applying the FFE user fee adjustment. HHS received several comments
suggesting that issuers should be required to submit information only
on an annual basis, rather than a monthly basis, to reduce the
administrative burden. Commenters also noted that it would likely be
difficult to estimate the cost of the contraceptive coverage
accurately, particularly in the initial years, given that the
prohibition on cost sharing could affect utilization. In addition,
commenters noted that costs would likely vary considerably based on
differences in utilization patterns and administrative processes.
In response to these comments, HHS is making certain modifications
to the process described previously. Rather than using a monthly
process, the final regulation at Sec. 156.50(d)(2) requires a
participating issuer seeking an FFE user fee adjustment to submit to
HHS, in the year following the calendar year in which the contraceptive
services for which payments were made under the accommodation described
previously were provided, for each self-insured plan, the total dollar
amount of the payments for contraceptive services that were provided
during the applicable calendar year. The issuer will then receive an
adjustment to its obligation to pay the FFE user fee equal to the cost
of the contraceptive services that were provided during the previous
year, plus an allowance, as specified by HHS, for administrative costs
and margin. For example, HHS expects that issuers seeking an FFE user
fee adjustment for payments for contraceptive services that were
provided in calendar year 2014 will be required to submit to HHS by
July 15, 2015, the total dollar amount of the payments. This timing
will allow adequate time for claims run-out and data collection. The
FFE user fee adjustment will be applied starting in October 2015.
Although this approach delays the application of the FFE user fee
adjustment, it significantly reduces the administrative burden on
issuers, third party administrators, and HHS. HHS believes that tying
the FFE user fee adjustment to the actual costs of payments for
contraceptive services, plus an allowance for administrative costs and
margin, will provide reasonable assurance that the adjustment is
adequate to cover the full costs of the payments for contraceptive
services, furthering the goal of providing contraceptive coverage
without cost sharing, as required by PHS Act section 2713 and the
companion provisions in ERISA and the Code.
As discussed later in this section, HHS is also directing third
party administrators to submit to HHS a notification that the third
party administrator intends for a participating issuer to seek an FFE
user fee adjustment. This notification must be provided by the later of
January 1, 2014, or the 60th calendar day following the date on which
the third party administrator receives a copy of a self-certification
from an eligible organization. The notification must be provided
whether it is intended that the participating issuer will provide
payments for contraceptive services on behalf of the third party
administrator, or whether it is intended that the participating issuer
will seek an adjustment to the FFE user fee with respect to such
payments made or arranged for by the third party administrator. HHS
will provide guidance on the manner of submission of the notification,
as well as guidance on the application for the FFE user fee adjustment,
through the process provided for under the Paperwork Reduction Act of
1995.
HHS is also modifying the standards proposed at Sec. 156.50(d) to
align with the final regulations regarding the accommodation for self-
insured group health plans of eligible organizations. As discussed
previously, under these final regulations, the third party
administrator may make the payments for contraceptive services itself,
or it may arrange for an issuer (including an issuer that does not
offer coverage through an FFE) or another entity to make the payments
on its behalf. Under either scenario, a third party administrator that
seeks to offset the costs of such payments through an FFE user fee
adjustment must enter into an arrangement with a participating issuer
offering coverage through an FFE. The participating issuer and the
third party administrator must each submit information to HHS, as
described in Sec. 156.50(d)(2) of the final regulation, to verify that
the payments for contraceptive services were provided in accordance
with these final regulations.
Specifically, in Sec. 156.50(d)(2)(i), HHS finalizes submission
standards for a participating issuer to receive the FFE user fee
adjustment. The participating issuer must submit to HHS, in the manner
and timeframe specified by HHS, in the year following the calendar year
in which the contraceptive services were provided: (A) Identifying
information for the participating issuer and each third party
administrator that received a copy of the self-certification with
respect to which the participating issuer seeks an adjustment in the
FFE user fee (whether or not the participating issuer was the entity
that made the payments for contraceptive services); (B) identifying
information for each self-insured group health plan with respect to
which a copy of the self-certification was received by a third party
administrator and with respect to
[[Page 39884]]
which the participating issuer seeks an adjustment in the FFE user fee;
and (C) for each such self-insured group health plan, the total dollar
amount of the payments for contraceptive services that were provided
during the applicable calendar year under the accommodation described
previously. If such payments were made by the participating issuer
directly, the total dollar amount should reflect the amount of the
payments made by the participating issuer; if the third party
administrator made or arranged for such payments, the total dollar
amount should reflect the amount reported to the participating issuer
by the third party administrator. Similarly, in Sec. 156.50(d)(2)(ii)
and (iii), HHS finalizes submission standards for the third party
administrator with respect to which the participating issuer seeks an
adjustment in the FFE user fee. In paragraph (d)(2)(ii), HHS finalizes
a standard under which the third party administrator must notify HHS,
by the later of January 1, 2014, or the 60th calendar day following the
date on which it receives the applicable copy of the self-
certification, that it intends to arrange for a participating issuer to
seek an FFE user fee adjustment. HHS will provide guidance on the
manner of this submission through the process provided for under the
Paperwork Reduction Act of 1995. This notification is necessary to
allow HHS to coordinate the development of the systems for
administering the FFE user fee adjustment. In paragraphs (d)(2)(iii)(A)
through (E), HHS specifies several other standards under which the
third party administrator must submit to HHS, in the year following the
calendar year in which the contraceptive services for which payments
were made under the accommodation described previously were provided,
the following information: (A) Identifying information for the third
party administrator and the participating issuer; (B) identifying
information for each self-insured group health plan with respect to
which the participating issuer seeks an adjustment in the FFE user fee;
(C) the total number of participants and beneficiaries in each self-
insured group health plan during the applicable calendar year; \46\ (D)
for each self-insured group health plan with respect to which the third
party administrator made payments for contraceptive services, the total
dollar amount of such payments that were provided during the applicable
calendar year under the accommodation described previously (if such
payments were made by the participating issuer directly, the total
dollar amount should reflect the amount reported to the third party
administrator by the participating issuer; if the third party
administrator made or arranged for such payments, the total dollar
amount should reflect the amount of the payments made by or on behalf
of the third party administrator); and (E) an attestation that the
payments for contraceptive services were made in compliance with 26 CFR
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2). If the third party
administrator does not meet these standards, the participating issuer
may not receive an FFE user fee adjustment to offset the costs of the
payments for contraceptive services incurred by or on behalf of the
third party administrator. HHS believes that it is necessary to collect
this information directly from the third party administrator that has
the duty to ensure that the payments for contraceptive services are
made to ensure the accuracy of the data provided, without requiring the
participating issuer to attest to information to which it may not have
access or over which it has little control.
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\46\ No personally identifiable information will be collected
from participating issuers or third party administrators pursuant to
Sec. 156.50(d)(2).
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In Sec. 156.50(d)(3), HHS establishes the process by which a
participating issuer will be provided a reduction in its obligation to
pay the FFE user fee. As long as an authorizing exception under OMB
Circular No. A-25R is in effect, the reduction will be calculated as
the sum of the total dollar amount of the payments for contraceptive
services submitted by the applicable third party administrators, as
described in paragraph (d)(2)(iii)(D), and an allowance, specified by
HHS, for administrative costs and margin. In the proposed regulations,
HHS requested comments on the appropriate method for determining the
administrative costs associated with providing the contraceptive
coverage, as well as a margin to ensure that issuers receive
appropriate compensation for providing the contraceptive coverage.
Commenters agreed with the proposal to reimburse for administrative
costs and to provide a margin. Commenters noted that administrative
costs would be incurred because of the complexities inherent in
arrangements between entities seeking the FFE user fee adjustment and
entities providing the contraceptive coverage, particularly when the
entities operate in different states. In addition, commenters stated
that administrative costs incurred by the third party administrators
could vary because of variations in billing processes.
As finalized in this regulation, for the initial years of this
policy, HHS will specify an allowance for administrative costs and
margin, which will be incorporated into the FFE user fee adjustment,
rather than request the third party administrator or the participating
issuer to submit to HHS an estimate of the third party administrator
and the participating issuer's administrative costs. This approach is
consistent with the general approach in these final regulations to
simplify administration of the accommodations for eligible
organizations, while still ensuring that no eligible organization is
required to contract, arrange, pay, or refer for contraceptive
coverage. HHS notes that it intends to review the methodology for
determining reimbursement for administrative costs and margin in future
years to ensure that HHS is accurately capturing these costs. HHS will
establish the allowance as a percentage of the cost of the payments for
contraceptive services because HHS believes that the majority of
administrative costs will be related to processing of payments to
providers for contraceptive services, and because HHS believes that it
is reasonable to measure margin on this business as a percentage of the
cost of the contraceptive services. HHS will establish the allowance at
no less than ten percent of such cost, and will specify the allowance
for a particular calendar year in the annual HHS notice of benefit and
payment parameters. The specific allowance for the 2014 calendar year
will be proposed for public comment in the HHS Notice of Payment and
Benefit Parameters for 2015 (which is scheduled to be published in the
fall of 2013). This approach will allow HHS to provide for a reasonable
allowance for administrative expenses for the third party
administrator, the participating issuer, and any other entity providing
the payments for contraceptive services on behalf of the third party
administrator, as well as a margin for each entity. HHS welcomes
feedback from third party administrators, participating issuers, and
other relevant stakeholders on the allowance for administrative costs
and margin, including the appropriate percentage and alternative
methods for future determination of the allowance for administrative
costs and margin.
Section 156.50(d)(4) is similar to the corresponding proposed
provision, and specifies that, as long as an exception under OMB
Circular No. A-25R is in effect, if the amount of the reduction under
paragraph (d)(3) is greater than the amount of the obligation to pay
the FFE user fee in a particular month, the participating issuer will
be provided a credit in succeeding months in the
[[Page 39885]]
amount of the excess. HHS notes that the likelihood of this occurring
will depend on the relative magnitudes of the cost of payments for
contraceptive services and the FFE user fee, the number of participants
and beneficiaries in self-insured plans with respect to which the
participating issuer seeks an adjustment in the FFE user fee, and the
number of individuals enrolled in coverage offered by the issuer
through the FFE. HHS also notes that it intends to provide a monthly
report, for the initial month in which the FFE user fee adjustment for
a particular calendar year is applied, and for succeeding months until
the credit is fully applied, to issuers that receive an FFE user fee
adjustment. HHS contemplates that this monthly report will include
information on the issuer's user fee obligation for the month, its
total adjustment for the applicable calendar year, the user fee
adjustment applied to date, and the value of the adjustment to be
credited to future months (so long as the exception under OMB Circular
No. A-25R is in effect). Additionally, HHS intends to provide a monthly
report to each applicable third party administrator detailing any FFE
user fee adjustment that will be provided to a participating issuer
with respect to the costs for contraceptive services incurred by or on
behalf of the third party administrator, as well as the portion of the
user fee adjustment applied to date.
Section 156.50(d)(5) specifies that, within 60 calendar days of
receipt of any adjustment in the FFE user fee, a participating issuer
must pay each third party administrator with respect to which it
received any portion of such adjustment an amount no less than the
portion of the adjustment attributable to the total dollar amount of
the payments for contraceptive services submitted by the third party
administrator, as described in paragraph (d)(2)(iii)(D). HHS expects
that the participating issuer will also agree to pay each third party
administrator a portion of such allowance (and that the apportionment
will be negotiated between the entities); HHS does not specify such
payment in this final regulation, as HHS expects the entities to work
out an arrangement that best fits their situation. Finally, HHS notes
that this provision does not apply if the participating issuer made the
payments for contraceptive services on behalf of the third party
administrator, as described in paragraph (d)(1)(i), or is in the same
issuer group (as defined in 45 CFR 156.20) as the third party
administrator.
In Sec. 156.50(d)(6) and (7), HHS establishes standards relating
to documentation and program integrity, similar to those proposed in
Sec. 156.50(d)(5), but modified slightly to align with the other
changes in this final regulation. In paragraph (d)(6), HHS specifies
that a participating issuer receiving an adjustment in the FFE user fee
under this section for a particular calendar year must maintain for 10
years following that year, and make available upon request to HHS, the
HHS Office of the Inspector General, the Comptroller General, and their
designees, documentation demonstrating that it timely paid each third
party administrator, with respect to which it received such adjustment,
any amount required under paragraph (d)(5). In paragraph (d)(7), HHS
specifies documentation standards for third party administrators with
respect to which an FFE user fee adjustment is received under this
section for a particular calendar year. Third party administrators must
maintain for 10 years following the applicable calendar year, and make
available upon request to HHS, the HHS Office of the Inspector General,
the Comptroller General, and their designees, all of the following: (i)
A copy of the self-certification provided by the eligible organization
for each self-insured plan with respect to which an adjustment is
received; (ii) documentation demonstrating that the payments for
contraceptive services were made in compliance with 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2); and (iii) documentation
supporting the total dollar amount of the payments for contraceptive
services submitted by the third party administrator, as described in
paragraph (d)(2)(iii)(D). Although a commenter argued that the
documentation retention standards should be shortened from 10 years to
6 years, to align with ERISA standards, we believe that the finalized
standard is appropriate as it aligns with timeframes under the False
Claims Act, 31 U.S.C. 3729-3733, and standards used for other Exchange
programs. HHS notes that a participating issuer or a third party
administrator may satisfy these standards by archiving these records
and ensuring that they are accessible if needed in the event of an
investigation, audit, or other review.
To summarize, costs of payments made for contraceptive services for
participants and beneficiaries in self-insured group health plans of
eligible organizations under the accommodation described previously
will be reimbursed through an adjustment in FFE user fees as follows:
The adjustment will be made to the FFE user fees of a
participating issuer, if that participating issuer made the payments
for the contraceptive services under the accommodation on behalf of the
third party administrator, or if it seeks the adjustment with respect
to such payments made or arranged for by the third party administrator.
A third party administrator must notify HHS that it
intends for a participating issuer to seek the adjustment by the later
of January 1, 2014, or the 60th calendar day following the date on
which it received the copy of the applicable self-certification.
For the participating issuer to receive the adjustment,
the third party administrator and the participating issuer must notify
HHS of the total amount of the payments made for the contraceptive
services under the accommodation, and provide certain other information
and documentation, including an attestation by the third party
administrator that the payments for the contraceptive services were
provided in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 CFR
2590.715-2713A(b)(2), by July 15 of the year following the calendar
year in which the contraceptive services were provided.
If the necessary conditions are met, and if an exception
under OMB Circular No. A-25R is in effect, the participating issuer
will receive an adjustment to its FFE user fee obligation equal to the
total amount of the payments for the contraceptive services provided
under the accommodation, plus an allowance for administrative costs and
margin. If the adjustment exceeds the FFE user fees owed in the month
of the initial adjustment, any excess adjustment will be carried over
to later months, for so long as the exception under OMB Circular No. A-
25R is in effect.
The allowance, which will be at least ten percent of the
costs of the payments for the contraceptive services under the
accommodation, will be specified by HHS in the annual HHS notice of
benefit and payment parameters.
Within 60 days of receipt of any adjustment, the
participating issuer must pay the third party administrator the portion
of the adjustment attributable to payments for contraceptive services
made by the third party administrator. No payment is required with
respect to the allowance for administrative costs and margin, although
it is expected that the participating issuer will agree to pay each
third party administrator a portion of such allowance. In addition, no
payment is required if the participating issuer made the payments for
the contraceptive services under the accommodation on behalf of the
third
[[Page 39886]]
party administrator, or if the participating issuer and third party
administrator are in the same issuer group.
Lastly, in response to comments received, HHS is finalizing a
provision clarifying that participating issuers may add any amounts
paid out to a third party administrator or incurred by or for the
participating issuer in contraceptive claims costs under the
accommodation for self-insured group health plans of eligible
organizations provided in these final regulations, plus the allowance
for administrative costs and margin provided under 45 CFR
156.50(d)(3)(ii), to their net FFE user fee paid to HHS, in
calculations relating to the index rate for the single risk pool under
45 CFR 156.80(d), the medical loss ratio under 45 CFR part 158, and the
risk corridors program under 45 CFR 153 subpart F. Several commenters
noted that improperly incorporating the FFE user fee adjustment
provided for under the final regulation into these calculations could
lead to unintended consequences. For example, if a participating issuer
were required to incorporate the FFE user fee adjustment into the
calculation of the medical loss ratio, but not allowed to incorporate
the cost of the accommodation for self-insured group health plans of
eligible organizations, the adjustment would reduce the amount reported
as licensing and regulatory fees (as described in 45 CFR 158.161(a)).
This would result in a lower medical loss ratio. HHS agrees that such a
result would not accurately reflect the ratio of claims to premiums, as
estimated by the medical loss ratio, for the participating issuer's
insurance business, because the FFE user fee adjustment occurs due to
activity not directly related to the participating issuer's insurance
business. Indeed, under Sec. 156.50(d)(5), the participating issuer is
required in many circumstances to pay out the greater share of the FFE
user fee adjustments to third party administrators responsible for
making (or arranging for another entity to make) the payments for
contraceptive services. Therefore, HHS clarifies that, for purposes of
the medical loss ratio and the risk corridors program, participating
issuers should report the sum of: (1) The net FFE user fee paid to HHS;
(2) any amounts paid out to a third party administrator or incurred by
or for the participating issuer in contraceptive claims costs under the
accommodation for self-insured group health plans of eligible
organizations provided in these final regulations; and (3) the
allowance for administrative costs and margin provided under 45 CFR
156.50(d)(3)(ii), as licensing and regulatory fees referenced in 45 CFR
158.161(a), or taxes and regulatory fees in the case of the risk
corridors program. For similar reasons, HHS is modifying the provision
at 45 CFR 156.80(d) to clarify that, for the purpose of establishing a
single risk pool index rate for a state market, any market-wide
adjustments to the index rate for expected Exchange user fees should
include: (1) The expected net FFE user fee to be paid to HHS; (2) any
amounts paid out to a third party administrator or incurred by or for
the participating issuer in contraceptive claims costs under the
accommodation for self-insured group health plans of eligible
organizations expected to be credited against user fees payable for
that state market; and (3) the allowance for administrative costs and
margin provided under 45 CFR 156.50(d)(3)(ii) expected to be credited
against user fees payable for that state market.
HHS clarifies that, if an issuer provides payments for
contraceptive services on behalf of a third party administrator, such
payments are not directly linked to any of the health insurance
coverage provided by the issuer, and the issuer should not incorporate
the cost of such payments into their calculations for the numerator
with respect to the medical loss ratio or the risk corridors program.
D. Treatment of Multiple Employer Group Health Plans
In the case of several employers offering coverage through a single
group health plan, the Departments proposed that each employer be
required to independently meet the definition of religious employer or
eligible organization in order to avail itself of the exemption or an
accommodation with respect to its employees and their covered
dependents. Several commenters supported the proposed approach of
applying the exemption and the accommodation on an employer-by-employer
basis. Other commenters favored a plan-based approach, allowing any
employer offering coverage through the same group health plan as a
religious employer or eligible organization to qualify for the
exemption or the accommodation, citing administrative challenges to an
employer-by-employer approach. A few commenters recommended criteria
for determining whether an employer is affiliated with a religious
employer or eligible organization with which it offers coverage through
a single group health plan, such as the control standards in Code
section 52(a) and (b), and therefore qualified for the exemption or an
accommodation.\47\
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\47\ Code section 52(a) generally provides that all employees of
all corporations that are members of the same controlled group of
corporations, including corporations that are at least 50 percent
controlled by a common parent corporation, are treated as employed
by a single employer. Code section 52(b) generally provides that all
employees of trades or businesses (whether or not incorporated) that
are under common control are treated as employed by a single
employer.
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The final regulations continue to provide that the availability of
the exemption or an accommodation be determined on an employer-by-
employer basis, which the Departments continue to believe best balances
the interests of religious employers and eligible organizations and
those of employees and their dependents. The Departments are clarifying
that, for purposes of these final regulations, any nonprofit
organization with religious objections to contraceptive coverage that
is part of the same controlled group of corporations or part of the
same group of trades or businesses under common control (each within
the meaning of section 52(a) or (b) of the Code) with a religious
employer and/or an eligible organization, and that offers coverage
through the same group health plan as such religious employer and/or
eligible organization, is considered to hold itself out as a religious
organization and therefore qualifies for an accommodation under these
final regulations. Each such organization must independently satisfy
the self-certification standard.
E. Religious Freedom Restoration Act and Other Federal Law
Some commenters expressed concerns about the proposed
accommodations for eligible organizations under the Religious Freedom
Restoration Act (RFRA) (Pub. L. 103-141) 107 Stat. 1488 (1993)
(codified at 42 U.S.C. 2000bb-1).\48\ All such concerns were
considered. But the accommodations for group health plans established
or maintained by eligible organizations (and group health insurance
coverage provided in connection with such plans), or student health
insurance coverage arranged by eligible organizations that are
institutions of higher education, are not required under RFRA. In
addition, the accommodations for eligible organizations under these
final regulations do not violate RFRA because
[[Page 39887]]
they do not substantially burden religious exercise, and they serve
compelling government interests and moreover are the least restrictive
means to achieve those interests.
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\48\ RFRA provides that the federal government generally may not
``substantially burden a person's exercise of religion, even if the
burden results from a rule of general applicability,'' unless the
burden: ``(1) Is in furtherance of a compelling governmental
interest; and (2) is the least restrictive means of furthering that
compelling governmental interest,'' 42 U.S.C. 2000bb-1.
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First, some commenters asserted that the proposed accommodations
would substantially burden their exercise of religion by requiring
their involvement in providing coverage of medical services to which
they object on religious grounds. These final regulations do not
require eligible organizations that provide self-certifications to
their issuers or third party administrators to provide health coverage
that includes benefits for contraceptive services, or to contract,
arrange, pay, or refer for such coverage or services. Issuers and third
party administrators cannot pass along the costs because these final
regulations specifically prohibit an issuer or third party
administrator from charging any premium or otherwise passing on any
cost relating to payments for contraceptive services to an eligible
organization. Thus, there is no burden on any religious exercise of the
eligible organization. And even if the accommodations were found to
impose some minimal burden on eligible organizations, any such burden
would not be substantial for the purposes of RFRA because a third party
pays for the contraceptive services and there are multiple degrees of
separation between the eligible organization and any individual's
choice to use contraceptive services.
One commenter contended that the mere act of self-certification
would facilitate access to contraception, resulting in violation of its
religious beliefs. But the self-certification under these final
regulations simply confirms that an eligible organization is a
nonprofit religious organization with religious objections to
contraceptive coverage and so informs the issuer or third party
administrator. Even prior to the proposed regulations, because
contraceptive benefits are typically in standard product designs, many
eligible organizations directed their issuers and third party
administrators not to make payments for claims for medical services to
which they object on religious grounds. In any event, in order for a
burden on religious exercise to be ``substantial'' under RFRA, its
effects on the objecting person cannot be as indirect and attenuated as
they are here. Under these final regulations, third parties, not
eligible organizations, provide the payments for contraceptive
services, at no cost to eligible organizations. And whether such
services will be utilized is the result of independent choices by
employees or students and their dependents, who have distinct interests
and may have their own religious views that differ from those of the
eligible organization.
Second, some commenters claimed that the proposed accommodations
would force them to fund or subsidize contraceptive coverage because
issuers or third party administrators would pass on the costs of such
coverage to eligible organizations. Again, however, these final
regulations specifically prohibit an issuer or third party
administrator from charging any premium, or otherwise passing on any
cost, to an eligible organization with respect to the payments for
contraceptive services.
Third, some commenters asserted that the contraceptive coverage
requirement fails to serve any compelling government interest. As noted
previously, however, the contraceptive coverage requirement serves two
compelling governmental interests. The contraceptive coverage
requirement furthers the government's compelling interest in
safeguarding public health by expanding access to and utilization of
recommended preventive services for women. HHS tasked IOM with
conducting an independent, science-based review of the available
literature to determine what preventive services are necessary for
women's health and well-being. IOM included in its recommendations for
comprehensive guidelines for women's preventive services all FDA-
approved contraceptive methods, sterilization procedures, and patient
education and counseling for women with reproductive capacity. IOM
determined that lack of access to contraceptive services has proven in
many cases to have serious negative health consequences for women and
newborn children.
The government also has a compelling interest in assuring that
women have equal access to health care services. Women would be denied
the full benefits of preventive care if their unique health care needs
were not considered and addressed. For example, prior to the
implementation of the preventive services coverage provision, women of
childbearing age spent 68 percent more on out-of-pocket health care
costs than men, and these costs resulted in women often forgoing
preventive care. The IOM found that this disproportionate burden on
women imposed financial barriers that prevented women from achieving
health outcomes on an equal basis with men. The contraceptive coverage
requirement helps remedy this problem by helping to equalize the
provision of preventive health care services to women and, as a result,
helping women contribute to society to the same degree as men.
Fourth, some commenters suggested that certain provisions of the
Affordable Care Act that, in their view, leave some women without
contraceptive coverage with no cost sharing demonstrate that the
government interests in providing such coverage cannot be truly
compelling. But these commenters misunderstand the effect of these
provisions.\49\
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\49\ For example, the Affordable Care Act's grandfathering
provision is only transitional in effect, and it is expected that a
majority of plans will lose their grandfathered status by the end of
2013. (75 FR 34552; June 17, 2010); see also Kaiser Family Found. &
Health Res. & Ed. Trust, Employer Health Benefits 2012 Annual Survey
at 7-8, 190, available at http://ehbs.kff.org/pdf/2012/8345.pdf.
Moreover, small employers that elect to offer non-grandfathered
health coverage to their employees are not exempt from the
requirement under the preventive health services coverage
regulations to provide coverage for recommended preventive health
services, including contraceptive services, without cost sharing
(subject to the religious employer exemption and eligible
organization accommodations in these final regulations). While the
Affordable Care Act excludes small employers from the possibility of
tax liability under the employer shared responsibility provision at
Code section 4980H, it encourages such employers to offer health
coverage to their employees by establishing new group health
insurance options through the SHOPs, as well as new tax incentives
to exercise such options. With respect to employees of small
employers that do not offer health coverage to their employees, the
Affordable Care Act establishes new individual health insurance
options through the Exchanges, as well as new tax credits to assist
the purchase of such insurance; such insurance will cover
recommended preventive services, including contraceptive services,
without cost sharing.
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Nor do the exemption for religious employers and the accommodations
for eligible organizations undermine the government's compelling
interests. With respect to the religious employer exemption, houses of
worship and their integrated auxiliaries that object to contraceptive
coverage on religious grounds are more likely than other employers to
employ people who are of the same faith and/or adhere to the same
objection, and who would therefore be less likely than other people to
use contraceptive services even if such services were covered under
their plan. Under the eligible organization accommodations, individuals
in plans of eligible organizations, who are less likely than
individuals in plans of religious employers to share their employer's
(or institution of higher education's) faith and objection to
contraceptive coverage on religious grounds, will still benefit from
payments for contraceptive services, even though such payments will not
be provided, funded, or subsidized by their employer (or institution of
higher education).
[[Page 39888]]
Fifth, some commenters asserted that the contraceptive coverage
requirement is not the least restrictive means of advancing these
compelling interests, and proposed various alternatives to these
regulations. All of these proposals were considered, and it was
determined that they were not feasible and/or would not advance the
government's compelling interests as effectively as the mechanisms
established in these final regulations and the preventive services
coverage regulations more generally. For example, some commenters
suggested that the government could provide contraceptive services to
all women free of charge (through Medicaid or another program),
establish a government-funded health benefits program for contraceptive
services, or force drug and device manufacturers to provide
contraceptive drugs and devices to women for free. The Departments lack
the statutory authority and funding to implement these proposals.
Moreover, the Affordable Care Act contemplates providing coverage of
recommended preventive services through the existing employer-based
system of health coverage so that women face minimal logistical and
administrative obstacles. Imposing additional barriers to women
receiving the intended coverage (and its attendant benefits), by
requiring them to take steps to learn about, and to sign up for, a new
health benefit, would make that coverage accessible to fewer women. The
same concern undermines the effectiveness of other commenters'
suggestion that the government require the multi-state plans on the
Exchanges to offer a stand-alone, contraceptive-only benefit to all
women without charge.
For another example, some commenters suggested that the government
should establish tax incentives for women to use contraceptive
services. Again, the Departments lack the statutory authority to
implement such proposal. Reliance only on tax incentives would also
depart from the existing employer-based system of health coverage,
would require women to pay out of pocket for their care in the first
instance, and would not benefit women who do not have sufficient income
to be required to file a tax return. Such barriers would make a tax
incentive structure less effective than the employer-based system of
health coverage in advancing the government's compelling interests.
Finally, some commenters expressed concern that the final
regulations violate the Religion Clauses of the First Amendment or
certain federal restrictions relating to abortion. The regulations do
not violate the Free Exercise Clause because they are neutral and
generally applicable. The regulations do not target religiously
motivated conduct, but rather, are intended to improve women's access
to preventive health care and lessen the disparity between men's and
women's health care costs. And the regulations are generally applicable
because they do not pursue their purpose only against conduct motivated
by religious belief. The exemption and accommodations set forth in the
regulations serve to accommodate religion, not to disfavor it.
The final regulations also do not violate the Establishment Clause.
The exemption and accommodations set forth in the regulations are not
restricted to organizations of a particular denomination or
denominations. Instead, they are available on an equal basis to
religious organizations affiliated with any and all religions.
Finally, the regulations do not violate federal restrictions
relating to abortion because FDA-approved contraceptive methods,
including Plan B, Ella, and IUDs, are not abortifacients within the
meaning of federal law. (62 FR 8611; February 25, 1997) (``Emergency
contraceptive pills are not effective if the woman is pregnant[.]'');
45 CFR 46.202(f) (``Pregnancy encompasses the period of time from
implantation until delivery.''). Further, these regulations do not
require nonprofit religious organizations that object to such
contraceptive methods to contract, arrange, pay, or refer for such
services.
F. No Effect on Other Law
The religious employer exemption and eligible organization
accommodations under these final regulations are intended to have
meaning solely with respect to the contraceptive coverage requirement
under section 2713 of the PHS Act and the companion provisions of ERISA
and the Code. Whether an employer or organization (including an
institution of higher education) is designated as religious for this
purpose is not intended as a judgment about the mission, sincerity, or
commitment of the employer or organization (including an institution of
higher education), or intended to differentiate among the religious
merits, mission, sincerity, commitment, or public or private standing
of religious entities. The use of such designation is limited solely to
defining the class of employers or organizations (including
institutions of higher education) that qualify for the religious
employer exemption and eligible organization accommodations under these
final regulations. The definition of religious employer or eligible
organization in these final regulations should not be construed to
apply with respect to, or relied upon for the interpretation of, any
other provision of the PHS Act, ERISA, the Code, or any other provision
of federal law, nor is it intended to set a precedent for any other
purpose. For example, nothing in these final regulations should be
construed as affecting the interpretation of federal or state civil
rights statutes, such as Title VII of the Civil Rights Act of 1964 or
Title IX of the Education Amendments of 1972.
Furthermore, nothing in these final regulations precludes employers
or others from expressing any opposition to the use of contraceptives;
requires anyone to use contraceptives; or requires health care
providers to prescribe or provide contraceptives if doing so is against
their religious beliefs.
The Departments received several comments requesting clarification
about whether the religious employer exemption and eligible
organization accommodations in these final regulations supersede state
laws that require health insurance issuers to provide contraceptive
coverage. The preemption provisions of section 731 of ERISA and section
2724 of the PHS Act (implemented at 29 CFR 2590.731(a) and 45 CFR
146.143(a)) apply such that the requirements of part 7 of ERISA and
title XXVII of the PHS Act are 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 or individual health insurance
coverage except to the extent that such standard or requirement
prevents the application of a requirement'' of federal law. With
respect to issuers subject to state law, insurance laws that provide
greater access to contraceptive coverage than federal standards are
unlikely to ``prevent the application of'' the preventive services
coverage provision, and therefore are unlikely to be preempted by these
final regulations. On the other hand, in states with broader religious
exemptions and accommodations with respect to health insurance issuers
than those in the final regulations, the exemptions and accommodations
will be narrowed to align with those in the final regulations. This is
consistent with the application of other federal health insurance
standards.
[[Page 39889]]
G. Applicability Dates and Transitional Enforcement Safe Harbor
These final regulations generally apply to group health plans and
health insurance issuers for plan years beginning on or after January
1, 2014, except the amendments to the religious employer exemption
apply to group health plans and health insurance issuers for plan years
beginning on or after August 1, 2013.
The Departments are extending the current safe harbor from
enforcement of the contraceptive coverage requirement by the
Departments to encompass plan years beginning on or after August 1,
2013, and before January 1, 2014. This transitional enforcement safe
harbor is intended to maintain the status quo with respect to
organizations that qualify for the current safe harbor during the
period that exists between the expiration of the current safe harbor
\50\ and the applicability date of the accommodations under these final
regulations. This period is designed to provide issuers and third party
administrators with sufficient time to prepare to implement the
accommodations under these final regulations. Organizations that
qualify under the current safe harbor are not required to execute
another self-certification if one has already been executed, but are
required to provide another notice to plan participants and
beneficiaries in connection with plan years beginning on or after
August 1, 2013, and before January 1, 2014. The guidance extending the
current safe harbor can be found at: www.cms.gov/cciio and www.dol.gov/healthreform.
---------------------------------------------------------------------------
\50\ See 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, issued on February 10, 2012, and reissued on August 15, 2012.
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IV. Economic Impact and Paperwork Burden
A. Executive Orders 12866 and 13563--Department of Health and Human
Services and Department of Labor
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, and public
health and safety effects; distributive impacts; and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Section 3(f) of Executive Order 12866 defines a ``significant
regulatory action'' as an action that is likely to result in a
regulation: (1) Having an annual effect on the economy of $100 million
or more in any one year, or adversely and materially affecting a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or state, local, or tribal governments or
communities (also referred to as ``economically significant''); (2)
creating a serious inconsistency or otherwise interfering with an
action taken or planned by another agency; (3) materially altering the
budgetary impacts of entitlement grants, user fees, or loan programs or
the rights and obligations of recipients thereof; or (4) raising novel
legal or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis must be prepared for major rules with
economically significant effects ($100 million or more in any one
year), and an ``economically significant'' regulatory action is subject
to review by the Office of Management and Budget (OMB). The Departments
have concluded that these final regulations are not likely to have
economic impacts of $100 million or more in any one year, and therefore
do not meet the definition of ``economically significant'' under
Executive Order 12866.
1. Need for Regulatory Action
As stated earlier in this preamble, the Departments previously
issued amended interim final regulations authorizing an exemption for
group health plans established or maintained by religious employers
(and group health insurance coverage provided in connection with such
plans) from certain coverage requirements under section 2713 of the PHS
Act (76 FR 46621, August 3, 2011). The amended interim final
regulations were finalized on February 15, 2012 (77 FR 8725). In these
final regulations, the Departments are amending the definition of
religious employer in the HHS regulation at 45 CFR 147.131(a)
(incorporated by reference in the regulations of the Departments of
Labor and the Treasury) by eliminating the first three prongs of the
definition of religious employer that was established in the 2012 final
regulations and clarifying the fourth prong. Accordingly, an employer
that is organized and operates as a nonprofit entity and is referred to
in section 6033(a)(3)(A)(i) or (iii) of the Code is a religious
employer, and its group health plan qualifies for the exemption from
the requirement to cover contraceptive services. In addition, the final
regulations establish accommodations that provide women with access to
such services, without cost sharing, while simultaneously protecting
certain nonprofit religious organizations with religious objections to
contraceptive coverage from having to contract, arrange, pay, or refer
for such coverage (as detailed herein).
2. Anticipated Effects
The Departments expect that these final regulations will not result
in any additional significant burden on or costs to the affected
entities.
B. Special Analyses--Department of the Treasury
For purposes of the Department of the Treasury, it has been
determined that this Treasury decision is not a significant regulatory
action as defined in Executive Order 12866, as amended by Executive
Order 13563. Therefore, a regulatory assessment is not required. It has
also been determined that section 553(b) of the Administrative
Procedure Act (5 U.S.C. chapter 5) does not apply to this final
regulation. It is hereby certified that the collections of information
contained in this final regulation do not have a significant impact on
a substantial number of small entities. Accordingly, a regulatory
flexibility analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required.
These final regulations require each organization seeking to be
treated as an eligible organization under the final regulations to
self-certify that it meets the definition of eligible organization in
the final regulations. The self-certification must be executed by an
authorized representative of the organization. The organization must
maintain the self-certification in its records in a manner consistent
with ERISA section 107 and make it available for examination upon
request. The final regulations also direct each eligible organization
to provide a copy of its self-certification to the group health
insurance issuer or third party administrator (as applicable) to avail
itself of an accommodation. The Departments are unable to estimate the
number of organizations that will seek to be treated as eligible
organizations. Of the eligible organizations, some will likely be small
entities. It is estimated that each eligible organization will need
only approximately 50 minutes of labor to prepare and provide the
information
[[Page 39890]]
in the self-certification. This will not be a significant economic
impact. For these reasons, this information collection requirement will
not have a significant impact on a substantial number of small
entities.
These final regulations also require health insurance issuers
providing payments for contraceptive services, or third party
administrators arranging or providing such payments (or their agents),
to provide written notice to plan participants and beneficiaries
regarding the availability of such payments. The notice will be
provided contemporaneous with (to the extent possible) but separate
from any application materials distributed in connection with
enrollment (or re-enrollment) in health coverage established,
maintained, or arranged by the eligible organization in any plan year
to which the accommodation is to apply. The final regulations contain
model language for issuers and third party administrators to use to
satisfy the notice requirement. It is unknown how many issuers provide
health insurance coverage in connection with insured plans of eligible
organizations or how many third party administrators provide plan
services to self-insured plans of eligible organizations. However, the
cost of preparation and distribution of the notices will not be
significant. It is estimated that each issuer or third party
administrator will need approximately 1 hour of clerical labor (at
$31.64 per hour) and 15 minutes of management review (at $55.22 per
hour) to prepare the notices for a total cost of approximately $44. It
is estimated that each notice will require $0.46 in postage and $0.05
in materials cost (paper and ink) and the total postage and materials
cost for each notice sent via mail will be $0.51. For these reasons,
these information collection requirements will not have a significant
impact on a substantial number of small entities.
Pursuant to section 7805(f) of the Code, the notice of proposed
rulemaking preceding this final regulation was submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on its impact on small businesses.
C. Paperwork Reduction Act--Department of Health and Human Services
These final regulations contain information collection requirements
(ICRs) that are subject to review by the Office of Management and
Budget (OMB). A description of these provisions is given in the
following paragraphs with an estimate of the annual burden. Average
labor costs (including fringe benefits) used to estimate the costs are
calculated using data available from the Bureau of Labor Statistics.
HHS sought comments in the proposed regulations, but did not
receive any information that would allow for an estimate of the number
of organizations that would seek to be treated as eligible
organizations, or an estimate of the number of health insurance issuers
that would provide separate payments for contraceptive services. HHS
is, nevertheless, seeking OMB approval for the following ICRs
consistent with the Paperwork Reduction Act of 1995. The burden
estimates will be updated in the future when more information is
available.
1. Self-Certification (Sec. Sec. 147.131(b)(4) and 147.131(c)(1))
Each organization seeking to be treated as an eligible organization
under the final regulations must self-certify that it meets the
definition of an eligible organization. The self-certification must be
executed by an authorized representative of the organization. The self-
certification will not be submitted to any of the Departments. The form
that will be used by organizations for their self-certification was
made available during the comment period for the proposed regulations
at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. HHS is finalizing this
form with updated instructions and notes, and eliminating the proposed
field for listing the contraceptive services for which the organization
will not establish, maintain, administer, or fund coverage. The
organization must maintain the self-certification in its records in a
manner consistent with ERISA section 107 and make it available for
examination upon request. The eligible organization must provide a copy
of its self-certification to a health insurance issuer for insured
group health plans or student health insurance coverage.
HHS is unable to estimate the number of organizations that will
seek to be treated as eligible organizations under the final
regulations. Therefore, the burden for only one eligible organization,
as opposed to all eligible organizations in total, is estimated. It is
assumed that, for each eligible organization, clerical staff will
gather and enter the necessary information, send the self-certification
electronically to the issuer, and retain a copy for record-keeping; a
manager and legal counsel will review it; and a senior executive will
execute it. HHS estimates that an organization will need approximately
50 minutes (30 minutes of clerical labor at a cost of $30.64 per hour,
10 minutes for a manager at a cost of $55.22 per hour, 5 minutes for
legal counsel at a cost of $83.10 per hour, and 5 minutes for a senior
executive at a cost of $112.43 per hour) to execute the self-
certification. The certification may be electronically transmitted to
the issuer at minimal cost. Therefore, the total annual burden for
preparing and providing the information in the self-certification is
estimated to be approximately $41 for each eligible organization.
2. Notice of Availability of Separate Payments for Contraceptive
Services (Sec. 147.131(d))
The proposed regulations sought comment on a notice of availability
of contraceptive coverage. The final regulations instead direct a
health insurance issuer providing payments for contraceptive services
for participants and beneficiaries in insured plans (or student
enrollees and covered dependents in student health insurance coverage)
of eligible organizations to provide a written notice to such plan
participants and beneficiaries (or such student enrollees and covered
dependents) informing them of the availability of such payments. The
notice must be provided 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 on the first day of each applicable plan year, and must
specify that contraceptive coverage will not be funded or administered
by the eligible organization but that the issuer provides separate
payments for contraceptive services. The notice must also provide
contact information for the issuer for questions and complaints. To
satisfy the notice requirement, issuers may use the model language set
forth in the final regulations or substantially similar language.
It is unknown how many issuers provide health insurance coverage in
connection with insured plans of eligible organizations. In the
proposed regulations, HHS estimated that each issuer would need
approximately 1 hour of clerical labor (at $31.64 per hour) and 15
minutes of management review (at $55.22 per hour) to prepare the
notices for a total cost of approximately $44. It was estimated that
each notice would require $0.46 in postage and $0.05 in materials cost
(paper and ink) and the total postage and materials cost for each
notice sent via mail would be $0.51.
[[Page 39891]]
One commenter stated that the cost of preparing and sending these
notices may be greater than estimated, but did not provide an estimate.
HHS believes that using the model language provided in the final
regulations will help minimize costs and declines to revise the
estimate.
3. Collections for FFE User Fee Adjustment (Sec. 156.50(d))
The final HHS regulation describes information collections with
respect to the FFE user fee adjustment under Sec. 156.50(d). The
information collection instruments are under development, and HHS will
seek public comments and OMB approval on the instruments at a later
date, consistent with the Paperwork Reduction Act of 1995.
4. Collections for Self-Insured Group Health Plans Without Third Party
Administrators
The final regulations provide that a self-insured group health plan
established or maintained by an eligible organization that does not use
the services of a third party administrator will be provided a safe
harbor from enforcement of the contraceptive coverage requirement by
the Departments contingent on, among other things: (1) the plan
providing certain information to HHS; and (2) the plan providing
participants and beneficiaries with notice that it does not provide
benefits for contraceptive services. As noted earlier in these final
regulations, the Departments believe that there are no self-insured
group health plans in this circumstance. Therefore, because the number
of respondents is likely to be fewer than 10, HHS is not seeking OMB
approval for this collection.
D. Paperwork Reduction Act--Department of Labor and Department of the
Treasury
As noted previously, as under the proposed regulations, each
organization seeking to be treated as an eligible organization under
the final regulations must self-certify that it meets the definition of
an eligible organization. This requirement is set out at 26 CFR
54.9815-2713A(a)(4) and 29 CFR 2590.715-2713A(a)(4) of the final
regulations of the Departments of Labor and the Treasury.
In addition, the final regulations include a notice of availability
of separate payments for contraceptive services. This notice
requirement is identical to that set forth in 45 CFR 147.131(d), but it
applies to third party administrators in connection with disclosures to
participants and beneficiaries in self-insured group health plans of
eligible organizations, instead of applying to health insurance issuers
in connection with disclosures to participants and beneficiaries in
insured group health plans of eligible organizations. Therefore, we are
seeking OMB approval for this notice, relying on the same estimates
noted previously.
V. Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, these final regulations do
not include any federal mandate that may result in expenditures by
state, local, or tribal governments, nor do they include any federal
mandates that may impose an annual burden of $100 million, adjusted for
inflation, or more on the private sector.\51\
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\51\ In 2013, that threshold level is approximately $141
million.
---------------------------------------------------------------------------
VI. Federalism--Department of Health and Human Services and Department
of Labor
Executive Order 13132 outlines fundamental principles of
federalism, and requires the adherence to specific criteria by federal
agencies in the process of their formulation and implementation of
policies that have ``substantial direct effects'' on states, the
relationship between the federal government and states, or the
distribution of power and responsibilities among the various levels of
government. Federal agencies promulgating regulations that have these
federalism implications must consult with state and local officials,
and describe the extent of their consultation and the nature of the
concerns of state and local officials in the preamble to the
regulation.
In the Departments' view, these final regulations have federalism
implications, but the federal implications are substantially mitigated
because, with respect to health insurance issuers, 15 states have
enacted specific laws, regulations, or bulletins that meet or exceed
the federal standards requiring coverage of specified preventive
services without cost sharing. The remaining states, which provide
oversight for these federal law requirements, do so using their general
authority to enforce these federal standards. Therefore, the final
regulations are not likely to require substantial additional oversight
of states by HHS.
In general, section 514 of ERISA provides that state laws are
superseded to the extent that they relate to any covered employee
benefit plan, and preserves state laws that regulate insurance,
banking, or securities. ERISA also prohibits states from regulating a
covered plan as an insurance or investment company or bank. The Health
Insurance Portability and Accountability Act of 1996 (HIPAA) added a
new preemption provision to ERISA (as well as to the PHS Act) narrowly
preempting state requirements on group health insurance coverage.
States may continue to apply state law requirements but not to the
extent that such requirements prevent the application of the federal
requirement that group health insurance coverage provided in connection
with group health plans provide coverage for specified preventive
services without cost sharing. HIPAA's Conference Report states that
the conferees intended the narrowest preemption of state laws with
regard to health insurance issuers (H.R. Conf. Rep. No. 104-736, 104th
Cong. 2d Session 205, 1996). State insurance laws that are more
stringent than the federal requirement are unlikely to ``prevent the
application of'' the preventive services coverage provision, and
therefore are unlikely to be preempted. Accordingly, states have
significant latitude to impose requirements on health insurance issuers
that are more restrictive than those in federal law.
Guidance conveying this interpretation was published in the Federal
Register on April 8, 1997 (62 FR 16904) and December 30, 2004 (69 FR
78720), and these final regulations implement the preventive services
coverage provision's minimum standards and do not significantly reduce
the discretion given to states under the statutory scheme.
The PHS Act provides that states may enforce the provisions of
title XXVII of the PHS Act as they pertain to issuers, but that the
Secretary of HHS will enforce any provisions that a state does not have
authority to enforce or that a state has failed to substantially
enforce. When exercising its responsibility to enforce provisions of
the PHS Act, HHS works cooperatively with the state to address the
state's concerns and avoid conflicts with the state's exercise of its
authority.\52\ HHS has developed procedures to implement its
[[Page 39892]]
enforcement responsibilities, and to afford states the maximum
opportunity to enforce the PHS Act's requirements in the first
instance. In compliance with Executive Order 13132's requirement that
agencies examine closely any policies that may have federalism
implications or limit the policymaking discretion of states, the
Departments have engaged in numerous efforts to consult and work
cooperatively with affected state and local officials.
---------------------------------------------------------------------------
\52\ This authority applies to insurance issued with respect to
group health plans generally, including plans covering employees of
church organizations. Thus, this discussion of federalism applies to
all group health insurance coverage that is subject to the PHS Act,
including those church plans that provide coverage through a health
insurance issuer (but not to church plans that do not provide
coverage through a health insurance issuer).
---------------------------------------------------------------------------
In conclusion, throughout the process of developing these final
regulations, to the extent feasible within the specific preemption
provisions of ERISA and the PHS Act, the Departments have attempted to
balance states' interests in regulating health coverage and health
insurance issuers, and the rights of those individuals whom Congress
intended to protect in the PHS Act, ERISA, and the Code.
VII. Statutory Authority
The Department of the Treasury regulations are adopted pursuant to
the authority contained in sections 7805 and 9833 of the Code.
The Department of Labor regulations are adopted pursuant to the
authority contained in 29 U.S.C. 1002(16), 1027, 1059, 1135, 1161-1168,
1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a,
1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 Stat. 1936; sec.
401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec.
512(d), Public Law 110-343, 122 Stat. 3881; sec. 1001, 1201, and
1562(e), Public Law 111-148, 124 Stat. 119, as amended by Public Law
111-152, 124 Stat. 1029; Secretary of Labor's Order 3-2010, 75 FR 55354
(September 10, 2010).
The Department of Health and Human Services regulations are adopted
pursuant to the authority contained in sections 2701 through 2763,
2791, and 2792 of the PHS Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended; and Title I of the Affordable Care Act,
sections 1301-1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-
1402, and 1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024,
18031-18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26
U.S.C. 36B, and 31 U.S.C. 9701).
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 2510
Employee benefit plans, Pensions.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, and State regulation of health insurance.
45 CFR Part 156
Administrative practice and procedure, Advertising, Advisory
committees, Brokers, Conflict of interest, Consumer protection, Grant
programs--health, Grants administration, Health care, Health insurance,
Health maintenance organization (HMO), Health records, Hospitals,
American Indian/Alaska Natives, Individuals with disabilities, Loan
programs--health, Organization and functions (Government agencies),
Medicaid, Public assistance programs, Reporting and recordkeeping
requirements, State and local governments, Sunshine Act, Technical
assistance, Women, and Youth.
DEPARTMENT OF THE TREASURY
Internal Revenue Service
Accordingly, 26 CFR part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
0
Paragraph 1. The authority citation for part 54 continues to read, in
part, as follows:
Authority: 26 U.S.C. 7805. * * *
0
Par. 2. Section 54.9815-2713 is amended by revising paragraphs (a)(1)
introductory text and (a)(1)(iv) to read as follows:
Sec. 54.9815-2713 Coverage of preventive health services.
(a) * * *
(1) In general. Beginning at the time described in paragraph (b) of
this section and subject to Sec. 54.9815-2713A, a group health plan,
or a health insurance issuer offering group health insurance coverage,
must provide coverage for all of the following items and services, and
may not impose any cost-sharing requirements (such as a copayment,
coinsurance, or a deductible) with respect to those items and services:
* * * * *
(iv) With respect to women, to the extent not described in
paragraph (a)(1)(i) of this section, evidence-informed preventive care
and screenings provided for in binding comprehensive health plan
coverage guidelines supported by the Health Resources and Services
Administration, in accordance with 45 CFR 147.131(a).
* * * * *
0
Par. 3. Section 54.9815-2713A is added to read as follows:
Sec. 54.9815-2713A Accommodations in connection with coverage of
preventive health services.
(a) Eligible organizations. An eligible organization is an
organization that satisfies all of the following requirements:
(1) The organization opposes providing coverage for some or all of
any contraceptive services required to be covered under Sec. 54.9815-
2713(a)(1)(iv) on account of religious objections.
(2) The organization is organized and operates as a nonprofit
entity.
(3) The organization holds itself out as a religious organization.
(4) The organization self-certifies, in a form and manner specified
by the Secretaries of Health and Human Services and Labor, that it
satisfies the criteria in paragraphs (a)(1) through (3) of this
section, and makes such self-certification available for examination
upon request by the first day of the first plan year to which the
accommodation in paragraph (b) or (c) of this section applies. The
self-certification must be executed by a person authorized to make the
certification on behalf of the organization, and must be maintained in
a manner consistent with the record retention requirements under
section 107 of ERISA.
(b) Contraceptive coverage--self-insured group health plans--(1) A
group health plan established or maintained by an eligible organization
that provides benefits on a self-insured basis complies for one or more
plan years with any requirement under Sec. 54.9815-2713(a)(1)(iv) to
provide contraceptive coverage if all of the requirements of this
paragraph (b)(1) of this section are satisfied:
(i) The eligible organization or its plan contracts with one or
more third party administrators.
(ii) The eligible organization provides each third party
administrator that will process claims for any contraceptive services
required to be covered under Sec. 54.9815-2713(a)(1)(iv) with a copy
of the self-certification described in paragraph (a)(4) of this
section, which shall include notice that--
(A) The eligible organization will not act as the plan
administrator or claims administrator with respect to claims for
contraceptive services, or contribute to
[[Page 39893]]
the funding of contraceptive services; and
(B) Obligations of the third party administrator are set forth in
29 CFR 2510.3-16 and 26 CFR 54.9815-2713A.
(iii) The eligible organization must not, directly or indirectly,
seek to interfere with a third party administrator's arrangements to
provide or arrange separate payments for contraceptive services for
participants or beneficiaries, and must not, directly or indirectly,
seek to influence the third party administrator's decision to make any
such arrangements.
(2) If a third party administrator receives a copy of the self-
certification described in paragraph (a)(4) of this section, and agrees
to enter into or remain in a contractual relationship with the eligible
organization or its plan to provide administrative services for the
plan, the third party administrator shall provide or arrange payments
for contraceptive services using one of the following methods--
(i) Provide payments for contraceptive services for plan
participants and beneficiaries without imposing any cost-sharing
requirements (such as a copayment, coinsurance, or a deductible), or
imposing a 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; or
(ii) Arrange for an issuer or other entity to provide payments for
contraceptive services for plan participants and beneficiaries without
imposing any cost-sharing requirements (such as a copayment,
coinsurance, or a deductible), or imposing a 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.
(3) If a third party administrator provides or arranges payments
for contraceptive services in accordance with either paragraph
(b)(2)(i) or (ii) of this section, the costs of providing or arranging
such payments may be reimbursed through an adjustment to the Federally-
facilitated Exchange user fee for a participating issuer pursuant to 45
CFR 156.50(d).
(4) A third party administrator may not require any documentation
other than the copy of the self-certification from the eligible
organization regarding its status as such.
(c) Contraceptive coverage--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 complies for one or more plan years with any
requirement under Sec. 54.9815-2713(a)(1)(iv) to provide contraceptive
coverage if the eligible organization or group health plan furnishes a
copy of the self-certification described in paragraph (a)(4) of this
section to each issuer that would otherwise provide such coverage in
connection with the group health plan. An issuer may not require any
documentation other than the copy of the self-certification from the
eligible organization regarding its status as such.
(2) Payments for contraceptive services--(i) A group health
insurance issuer that receives a copy of the self-certification
described in paragraph (a)(4) of this section with respect to a group
health plan established or maintained by an eligible organization in
connection with which the issuer would otherwise provide contraceptive
coverage under Sec. 54.9815-2713(a)(1)(iv) must--
(A) Expressly exclude contraceptive coverage from the group health
insurance coverage provided in connection with the group health plan;
and
(B) Provide separate payments for any contraceptive services
required to be covered under Sec. 54.9815-2713(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), or impose any 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, as incorporated into section 9815. 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.
54.9815-2713(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.
(d) Notice of availability of separate payments for contraceptive
services--self-insured and insured group health plans. For each plan
year to which the accommodation in paragraph (b) or (c) of this section
is to apply, a third party administrator required to provide or arrange
payments for contraceptive services pursuant to paragraph (b) of this
section, and an issuer required to provide payments for contraceptive
services pursuant to paragraph (c) 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 third party administrator or issuer, as applicable, 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 (d): ``Your employer has certified that
your group health plan 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 will
not contract, arrange, pay, or refer for contraceptive coverage.
Instead, [name of third party administrator/health insurance issuer]
will provide or arrange 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. Your employer will not
administer or fund these payments. If you have any questions about this
notice, contact [contact information for third party administrator/
health insurance issuer].''
(e) Reliance--insured group health plans--(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
(c) of this section, and the representation is later determined to be
incorrect, the issuer is considered to comply with any requirement
under Sec. 54.9815-2713(a)(1)(iv) to provide contraceptive coverage if
the issuer
[[Page 39894]]
complies with the obligations under this section applicable to such
issuer.
(2) A group health plan is considered to comply with any
requirement under Sec. 54.9815-2713(a)(1)(iv) to provide contraceptive
coverage if the plan complies with its obligations under paragraph (c)
of this section, without regard to whether the issuer complies with the
obligations under this section applicable to such issuer.
DEPARTMENT OF LABOR
Employee Benefits Security Administration
For the reasons stated in the preamble, the Department of Labor
amends 29 CFR parts 2510 and 2590 as follows:
PART 2510--DEFINITION OF TERMS USED IN SUBCHAPTERS C, D, E, F, G
AND L OF THIS CHAPTER
0
1. The authority citation for part 2510 is revised to read as follows:
Authority: 29 U.S.C. 1002(2), 1002(16), 1002(21),1002(37),
1002(38), 1002(40), 1031, and 1135; Secretary of Labor's Order 1-
2003, 68 FR 5374; Sec. 2510.3-101 also issued under sec. 102 of
Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 1978 Comp.,
p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 275, and 29
U.S.C. 1135 note. Sec. 2510.3-102 also issued under sec. 102 of
Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 1978 Comp.,
p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 275. Sec.
2510.3-38 is also issued under sec. 1, Pub. L. 105-72, 111 Stat.
1457.
0
2. Section 2510.3-16 is added to read as follows:
Sec. 2510.3-16 Definition of ``plan administrator.''
(a) In general. The term ``plan administrator'' or
``administrator'' means the person specifically so designated by the
terms of the instrument under which the plan is operated. If an
administrator is not so designated, the plan administrator is the plan
sponsor, as defined in section 3(16)(B) of ERISA.
(b) In the case of a self-insured group health plan established or
maintained by an eligible organization, as defined in Sec. 2590.715-
2713A(a) of this chapter, the copy of the self-certification provided
by the eligible organization to a third party administrator (including
notice of the eligible organization's refusal to administer or fund
contraceptive benefits) in accordance with Sec. 2590.715-
2713A(b)(1)(ii) of this chapter shall be an instrument under which the
plan is operated, shall be treated as a designation of the third party
administrator as the plan administrator under section 3(16) of ERISA
for any contraceptive services required to be covered under Sec.
2590.715-2713(a)(1)(iv) of this chapter to which the eligible
organization objects on religious grounds, and shall supersede any
earlier designation. A third party administrator that becomes a plan
administrator pursuant to this section shall be responsible for--
(1) The plan's compliance with section 2713 of the Public Health
Service Act (42 U.S.C. 300gg-13) (as incorporated into section 715 of
ERISA) and Sec. 2590.715-2713 of this chapter with respect to coverage
of contraceptive services. To the extent that the plan contracts with
different third party administrators for different classifications of
benefits (such as prescription drug benefits versus inpatient and
outpatient benefits), each third party administrator is responsible for
providing contraceptive coverage that complies with section 2713 of the
Public Health Service Act (as incorporated into section 715 of ERISA)
and Sec. 2590.715-2713 of this chapter with respect to the
classification or classifications of benefits subject to its contract.
(2) Establishing and operating a procedure for determining such
claims for contraceptive services in accordance with Sec. 2560.503-1
of this chapter.
(3) Complying with disclosure and other requirements applicable to
group health plans under Title I of ERISA with respect to such
benefits.
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
3. The authority citation for part 2590 is revised to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and
1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b),
Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 12(d),
Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub.
L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat.
1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9,
2012).
0
4. Section 2590.715-2713 is amended by revising paragraphs (a)(1)
introductory text and (a)(1)(iv) to read as follows:
Sec. 2590.715-2713 Coverage of preventive health services.
(a) * * *
(1) In general. Beginning at the time described in paragraph (b) of
this section and subject to Sec. 2590.715-2713A, a group health plan,
or a health insurance issuer offering group health insurance coverage,
must provide coverage for all of the following items and services, and
may not impose any cost-sharing requirements (such as a copayment,
coinsurance, or a deductible) with respect to those items and services:
* * * * *
(iv) With respect to women, to the extent not described in
paragraph (a)(1)(i) of this section, evidence-informed preventive care
and screenings provided for in binding comprehensive health plan
coverage guidelines supported by the Health Resources and Services
Administration, in accordance with 45 CFR 147.131(a).
* * * * *
0
5. Section 2590.715-2713A is added to read as follows:
Sec. 2590.715-2713A Accommodations in connection with coverage of
preventive health services.
(a) Eligible organizations. An eligible organization is an
organization that satisfies all of the following requirements:
(1) The organization opposes providing coverage for some or all of
any contraceptive services required to be covered under Sec. 2590.715-
2713(a)(1)(iv) on account of religious objections.
(2) The organization is organized and operates as a nonprofit
entity.
(3) The organization holds itself out as a religious organization.
(4) The organization self-certifies, in a form and manner specified
by the Secretary, that it satisfies the criteria in paragraphs (a)(1)
through (3) of this section, and makes such self-certification
available for examination upon request by the first day of the first
plan year to which the accommodation in paragraph (b) or (c) of this
section applies. The self-certification must be executed by a person
authorized to make the certification on behalf of the organization, and
must be maintained in a manner consistent with the record retention
requirements under section 107 of ERISA.
(b) Contraceptive coverage--self-insured group health plans--(1) A
group health plan established or maintained by an eligible organization
that provides benefits on a self-insured basis complies for one or more
plan years with any requirement under Sec. 2590.715-2713(a)(1)(iv) to
provide contraceptive coverage if all of the requirements of this
paragraph (b)(1) are satisfied:
(i) The eligible organization or its plan contracts with one or
more third party administrators.
(ii) The eligible organization provides each third party
administrator that will
[[Page 39895]]
process claims for any contraceptive services required to be covered
under Sec. 2590.715-2713(a)(1)(iv) with a copy of the self-
certification described in paragraph (a)(4) of this section, which
shall include notice that--
(A) The eligible organization will not act as the plan
administrator or claims administrator with respect to claims for
contraceptive services, or contribute to the funding of contraceptive
services; and
(B) Obligations of the third party administrator are set forth in
Sec. 2510.3-16 of this chapter and Sec. 2590.715-2713A.
(iii) The eligible organization must not, directly or indirectly,
seek to interfere with a third party administrator's arrangements to
provide or arrange separate payments for contraceptive services for
participants or beneficiaries, and must not, directly or indirectly,
seek to influence the third party administrator's decision to make any
such arrangements.
(2) If a third party administrator receives a copy of the self-
certification described in paragraph (a)(4) of this section, and agrees
to enter into or remain in a contractual relationship with the eligible
organization or its plan to provide administrative services for the
plan, the third party administrator shall provide or arrange payments
for contraceptive services using one of the following methods--
(i) Provide payments for contraceptive services for plan
participants and beneficiaries without imposing any cost-sharing
requirements (such as a copayment, coinsurance, or a deductible), or
imposing a 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; or
(ii) Arrange for an issuer or other entity to provide payments for
contraceptive services for plan participants and beneficiaries without
imposing any cost-sharing requirements (such as a copayment,
coinsurance, or a deductible), or imposing a 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.
(3) If a third party administrator provides or arranges payments
for contraceptive services in accordance with either paragraph
(b)(2)(i) or (ii) of this section, the costs of providing or arranging
such payments may be reimbursed through an adjustment to the Federally-
facilitated Exchange user fee for a participating issuer pursuant to 45
CFR 156.50(d).
(4) A third party administrator may not require any documentation
other than the copy of the self-certification from the eligible
organization regarding its status as such.
(c) Contraceptive coverage--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 complies for one or more plan years with any
requirement under Sec. 2590.715-2713(a)(1)(iv) to provide
contraceptive coverage if the eligible organization or group health
plan furnishes a copy of the self-certification described in paragraph
(a)(4) of this section to each issuer that would otherwise provide such
coverage in connection with the group health plan. An issuer may not
require any documentation other than the copy of the self-certification
from the eligible organization regarding its status as such.
(2) Payments for contraceptive services--(i) A group health
insurance issuer that receives a copy of the self-certification
described in paragraph (a)(4) of this section with respect to a group
health plan established or maintained by an eligible organization in
connection with which the issuer would otherwise provide contraceptive
coverage under Sec. 2590.715-2713(a)(1)(iv) must--
(A) Expressly exclude contraceptive coverage from the group health
insurance coverage provided in connection with the group health plan;
and
(B) Provide separate payments for any contraceptive services
required to be covered under Sec. 2590.715-2713(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), or impose any 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, as incorporated into section 715 of ERISA. 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. 2590.715-2713(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.
(d) Notice of availability of separate payments for contraceptive
services--self-insured and insured group health plans. For each plan
year to which the accommodation in paragraph (b) or (c) of this section
is to apply, a third party administrator required to provide or arrange
payments for contraceptive services pursuant to paragraph (b) of this
section, and an issuer required to provide payments for contraceptive
services pursuant to paragraph (c) 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 third party administrator or issuer, as applicable, 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 (d): ``Your employer has certified that
your group health plan 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 will
not contract, arrange, pay, or refer for contraceptive coverage.
Instead, [name of third party administrator/health insurance issuer]
will provide or arrange 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. Your employer will not
administer or fund these payments. If you have any questions about this
notice, contact [contact information for third party administrator/
health insurance issuer].''
[[Page 39896]]
(e) Reliance--insured group health plans--(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
(c) of this section, and the representation is later determined to be
incorrect, the issuer is considered to comply with any requirement
under Sec. 2590.715-2713(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
requirement under Sec. 2590.715-2713(a)(1)(iv) to provide
contraceptive coverage if the plan complies with its obligations under
paragraph (c) of this section, without regard to whether the issuer
complies with the obligations under this section applicable to such
issuer.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
For the reasons stated in the preamble, the Department of Health
and Human Services amends 45 CFR Subtitle A parts 147 and 156 as
follows:
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
1. The authority citation for part 147 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92), as amended.
0
2. Section 147.130 is amended by revising paragraphs (a)(1)
introductory text and (a)(1)(iv) to read as follows:
Sec. 147.130 Coverage of preventive health services.
(a) * * *
(1) In general. Beginning at the time described in paragraph (b) of
this section and subject to Sec. 147.131, a group health plan, or a
health insurance issuer offering group or individual health insurance
coverage, must provide coverage for all of the following items and
services, and may not impose any cost-sharing requirements (such as a
copayment, coinsurance, or a deductible) with respect to those items
and services:
* * * * *
(iv) With respect to women, to the extent not described in
paragraph (a)(1)(i) of this section, evidence-informed preventive care
and screenings provided for in binding comprehensive health plan
coverage guidelines supported by the Health Resources and Services
Administration.
* * * * *
0
3. Section 147.131 is added to read as follows:
Sec. 147.131 Exemption and accommodations in connection with coverage
of preventive health services.
(a) Religious employers. In issuing guidelines under Sec.
147.130(a)(1)(iv), the Health Resources and Services Administration may
establish an exemption from such guidelines with respect to a group
health plan established or maintained by a religious employer (and
health insurance coverage provided in connection with a group health
plan established or maintained by a religious employer) with respect to
any requirement to cover contraceptive services under such guidelines.
For purposes of this paragraph (a), a ``religious employer'' is an
organization that is organized and operates as a nonprofit entity and
is referred to in section 6033(a)(3)(A)(i) or (iii) of the Internal
Revenue Code of 1986, as amended.
(b) Eligible organizations. An eligible organization is an
organization that satisfies all of the following requirements:
(1) The organization opposes providing coverage for some or all of
any contraceptive services required to be covered under Sec.
147.130(a)(1)(iv) on account of religious objections.
(2) The organization is organized and operates as a nonprofit
entity.
(3) The organization holds itself out as a religious organization.
(4) The organization self-certifies, in a form and manner specified
by the Secretary, that it satisfies the criteria in paragraphs (b)(1)
through (3) of this section, and makes such self-certification
available for examination upon request by the first day of the first
plan year to which the accommodation in paragraph (c) of this section
applies. The self-certification must be executed by a person authorized
to make the certification on behalf of the organization, and must be
maintained in a manner consistent with the record retention
requirements under section 107 of the Employee Retirement Income
Security Act of 1974.
(c) Contraceptive coverage--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 complies for one or more plan years with any
requirement under Sec. 147.130(a)(1)(iv) to provide contraceptive
coverage if the eligible organization or group health plan furnishes a
copy of the self-certification described in paragraph (b)(4) of this
section to each issuer that would otherwise provide such coverage in
connection with the group health plan. An issuer may not require any
documentation other than the copy of the self-certification from the
eligible organization regarding its status as such.
(2) Payments for contraceptive services--(i) A group health
insurance issuer that receives a copy of the self-certification
described in paragraph (b)(4) of this section with respect to a group
health plan established or maintained by an eligible organization in
connection with which the issuer would otherwise provide contraceptive
coverage under Sec. 147.130(a)(1)(iv) must--
(A) Expressly exclude contraceptive coverage from the group health
insurance coverage provided in connection with the group health plan;
and
(B) Provide separate payments for any contraceptive services
required to be covered under Sec. 147.130(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), or impose any 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.
(d) 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 accommodation in paragraph
(c) of this section is to apply, an issuer required to provide
[[Page 39897]]
payments for contraceptive services pursuant to paragraph (c) 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 (d): ``Your [employer/institution of
higher education] has 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].''
(e) 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 (c) of this section, and the
representation is later determined to be incorrect, the issuer is
considered to comply with any 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
requirement under Sec. 147.130(a)(1)(iv) to provide contraceptive
coverage if the plan complies with its obligations under paragraph (c)
of this section, without regard to whether the issuer complies with the
obligations under this section applicable to such issuer.
(f) Application to student health insurance coverage. The
provisions of this section apply to student health insurance coverage
arranged by an eligible organization that is an institution of higher
education in a manner comparable to that in which they apply to group
health insurance coverage provided in connection with a group health
plan established or maintained by an eligible organization that is an
employer. In applying this section in the case of student health
insurance coverage, a reference to ``plan participants and
beneficiaries'' is a reference to student enrollees and their covered
dependents.
PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES
0
4. The authority citation for part 156 continues to read as follows:
Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, and
1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-
18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26
U.S.C. 36B, and 31 U.S.C. 9701).
0
5. Section 156.50 is amended by adding paragraph (d) to read as
follows:
Sec. 156.50 Financial support.
* * * * *
(d) Adjustment of Federally-facilitated Exchange user fee--(1) A
participating issuer offering a plan through a Federally-facilitated
Exchange may qualify for an adjustment in the Federally-facilitated
Exchange user fee specified in paragraph (c) of this section to the
extent that the participating issuer--
(i) Made payments for contraceptive services on behalf of a third
party administrator pursuant to 26 CFR 54.9815-2713A(b)(2)(ii) or 29
CFR 2590.715-2713A(b)(2)(ii); or
(ii) Seeks an adjustment in the Federally-facilitated Exchange user
fee with respect to a third party administrator that, following receipt
of a copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4), made or arranged for
payments for contraceptive services pursuant to 26 CFR 54.9815-
2713A(b)(2)(i) or (ii) or 29 CFR 2590.715-2713A(b)(2)(i) or (ii).
(2) For a participating issuer described in paragraph (d)(1) of
this section to receive the Federally-facilitated Exchange user fee
adjustment--
(i) The participating issuer must submit to HHS, in the manner and
timeframe specified by HHS, in the year following the calendar year in
which the contraceptive services for which payments were made pursuant
to 26 CFR 54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were
provided --
(A) Identifying information for the participating issuer and each
third party administrator that received a copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR
2590.715-2713A(a)(4) with respect to which the participating issuer
seeks an adjustment in the Federally-facilitated Exchange user fee,
whether or not the participating issuer was the entity that made the
payments for contraceptive services;
(B) Identifying information for each self-insured group health plan
with respect to which a copy of the self-certification referenced in 26
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by
a third party administrator and with respect to which the participating
issuer seeks an adjustment in the Federally-facilitated Exchange user
fee; and
(C) For each such self-insured group health plan, the total dollar
amount of the payments that were made pursuant to 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive services
that were provided during the applicable calendar year. If such
payments were made by the participating issuer directly as described in
paragraph (d)(1)(i) of this section, the total dollar amount should
reflect the amount of the payments made by the participating issuer; if
the third party administrator made or arranged for such payments, as
described in paragraph (d)(1)(ii) of this section, the total dollar
amount should reflect the amount reported to the participating issuer
by the third party administrator.
(ii) Each third party administrator that intends for a
participating issuer to seek an adjustment in the Federally-facilitated
Exchange user fee with respect to the third party administrator for
payments for contraceptive services must submit to HHS a notification
of such intent, in a manner specified by HHS, by the later of January
1, 2014, or the 60th calendar day following the date on which the third
party administrator receives the applicable copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR
2590.715-2713A(a)(4).
(iii) Each third party administrator identified in paragraph
(d)(2)(i)(A) of
[[Page 39898]]
this section must submit to HHS, in the manner and timeframe specified
by HHS, in the year following the calendar year in which the
contraceptive services for which payments were made pursuant to 26 CFR
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were provided--
(A) Identifying information for the third party administrator and
the participating issuer;
(B) Identifying information for each self-insured group health plan
with respect to which a copy of the self-certification referenced in 26
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by
the third party administrator and with respect to which the
participating issuer seeks an adjustment in the Federally-facilitated
Exchange user fee;
(C) The total number of participants and beneficiaries in each such
self-insured group health plan during the applicable calendar year;
(D) For each such self-insured group health plan with respect to
which the third party administrator made payments pursuant to 26 CFR
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive
services, the total dollar amount of such payments that were provided
during the applicable calendar year. If such payments were made by the
participating issuer directly as described in paragraph (d)(1)(i) of
this section, the total dollar amount should reflect the amount
reported to the third party administrator by the participating issuer;
if the third party administrator made or arranged for such payments, as
described in paragraph (d)(1)(ii) of this section, the total dollar
amount should reflect the amount of the payments made by or on behalf
of the third party administrator; and
(E) An attestation that the payments for contraceptive services
were made in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 CFR
2590.715-2713A(b)(2).
(3) If the requirements set forth in paragraph (d)(2) of this
section are met, and as long as an authorizing exception under OMB
Circular No. A-25R is in effect, the participating issuer will be
provided a reduction in its obligation to pay the Federally-facilitated
Exchange user fee specified in paragraph (c) of this section equal in
value to the sum of the following:
(i) The total dollar amount of the payments for contraceptive
services submitted by the applicable third party administrators, as
described in paragraph (d)(2)(iii)(D) of this section.
(ii) An allowance for administrative costs and margin. The
allowance will be no less than 10 percent of the total dollar amount of
the payments for contraceptive services specified in paragraph
(d)(3)(i) of this section. HHS will specify the allowance for a
particular calendar year in the annual HHS notice of benefit and
payment parameters.
(4) As long as an exception under OMB Circular No. A-25R is in
effect, if the amount of the adjustment under paragraph (d)(3) of this
section is greater than the amount of the participating issuer's
obligation to pay the Federally-facilitated Exchange user fee in a
particular month, the participating issuer will be provided a credit in
succeeding months in the amount of the excess.
(5) Within 60 days of receipt of any adjustment in the Federally-
facilitated Exchange user fee under this section, a participating
issuer must pay each third party administrator with respect to which it
received any portion of such adjustment an amount no less than the
portion of the adjustment attributable to the total dollar amount of
the payments for contraceptive services submitted by the third party
administrator, as described in paragraph (d)(2)(iii)(D) of this
section. No such payment is required with respect to the allowance for
administrative costs and margin described in paragraph (d)(3)(ii) of
this section. This paragraph does not apply if the participating issuer
made the payments for contraceptive services on behalf of the third
party administrator, as described in paragraph (d)(1)(i) of this
section, or is in the same issuer group as the third party
administrator.
(6) A participating issuer receiving an adjustment in the
Federally-facilitated Exchange user fee under this section for a
particular calendar year must maintain for 10 years following that
year, and make available upon request to HHS, the Office of the
Inspector General, the Comptroller General, and their designees,
documentation demonstrating that it timely paid each third party
administrator with respect to which it received any such adjustment any
amount required to be paid to the third party administrator under
paragraph (d)(5) of this section.
(7) A third party administrator with respect to which an adjustment
in the Federally-facilitated Exchange user fee is received under this
section for a particular calendar year must maintain for 10 years
following that year, and make available upon request to HHS, the Office
of the Inspector General, the Comptroller General, and their designees,
all of the following documentation:
(i) A copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) for each self-insured plan
with respect to which an adjustment is received.
(ii) Documentation demonstrating that the payments for
contraceptive services were made in compliance with 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2).
(iii) Documentation supporting the total dollar amount of the
payments for contraceptive services submitted by the third party
administrator, as described in paragraph (d)(2)(iii)(D) of this
section.
0
6. Section 156.80 is amended by revising paragraph (d)(1) to read as
follows:
Sec. 156.80 Single risk pool.
* * * * *
(d) * * *
(1) In general. Each plan year or policy year, as applicable, a
health insurance issuer must establish an index rate for a state market
described in paragraphs (a) through (c) of this section based on the
total combined claims costs for providing essential health benefits
within the single risk pool of that state market. The index rate must
be adjusted on a market-wide basis for the state based on the total
expected market-wide payments and charges under the risk adjustment and
reinsurance programs, and Exchange user fees (expected to be remitted
under Sec. 156.50(b) or Sec. 156.50(c) and (d) of this subchapter as
applicable plus the dollar amount under Sec. 156.50(d)(3)(i) and (ii)
of this subchapter expected to be credited against user fees payable
for that state market). The premium rate for all of the health
insurance issuer's plans in the relevant state market must use the
applicable market-wide adjusted index rate, subject only to the plan-
level adjustments permitted in paragraph (d)(2) of this section.
* * * * *
[[Page 39899]]
Signed this 27th day of June 2013.
Beth Tucker,
Deputy Commissioner for Operations Support, Internal Revenue Service.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
Signed this 26th day of June 2013.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
Dated: June 20, 2013
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 25, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-15866 Filed 6-28-13; 11:15 am]
BILLING CODE 4830-01-P; 4510-029-P; 4120-01-P; 6325-64-P