Health Care Reform Update: Lifetime/Annual Limits, Rescissions, Patient Protections, Emergency Care
Interim final regulations providing guidance on certain aspects of the Patient Protection and Affordable Care Act ("PPACA") have been recently issued. Four provisions of the PPACA addressed by the interim final regulations are the restrictions on annual and lifetime limits on coverage, prohibitions on rescissions, patient protections offered under the PPACA, and limitations on restrictions on emergency care.
Annual and Lifetime Limits on Coverage
The PPACA generally prohibits plans and health insurance issuers from imposing lifetime or annual limits on the dollar value of health benefits.
The PPACA and the interim final regulations specify that group health plans and health insurance issuers may establish restricted annual limits on the value of "essential health benefits" for plan years beginning before January 1, 2014. The annual limits on the dollar value of benefits that are essential health benefits may not be less than the following amounts:
- For plan years beginning on or after 9/23/2010, but before 9/23/2011, $750,000;
- For plan years beginning on or after 9/23/2011, but before 9/23/2012, $1.25 million; and
- For plan years beginning on or after 9/23/2012, but before 1/1/2014, $2 million.
For plan years beginning on or after January 1, 2014, annual limits on essential health benefits are prohibited. Regulations defining essential health benefits have not yet been issued.
The interim final regulations specify that the restrictions on annual limits do not apply to health flexible spending arrangements, medical savings accounts, or health savings accounts. However, the restrictions on annual limits do apply to certain health reimbursement arrangements that are not integrated with other coverage as part of a group health plan if the other coverage would comply with the restrictions on annual limits.
Plans and issuers are required to give notice that the lifetime limit on benefits no longer applies. Individuals who have reached a lifetime limit under a plan are eligible for benefits under the plan and, if an individual is not enrolled in the plan, the plan or issuer must give the individual an opportunity to enroll. The notice and enrollment opportunity must be given not later than the first day of the plan year beginning on or after September 23, 2010. The Department of Labor has provided the following model notice:
"The lifetime limit on the dollar value of benefits under [Insert name of group health plan or health insurance issuer] no longer applies. Individuals whose coverage ended by reason of reaching a lifetime limit under the plan are eligible to enroll in the plan. Individuals have 30 days from the date of this notice to request enrollment. For more information contact the [insert plan administrator or issuer] at [insert contact information]."
Under the PPACA and the interim final regulations, plans and health insurance issuers may not retroactively cancel or discontinue coverage except in the event of an individual's fraud or intentional misrepresentation of a material fact. However, coverage may be retroactively cancelled to the extent the cancellation is attributed to a failure to timely pay required premiums or contributions towards the cost of coverage. In situations where retroactive cancellation is permissible, advance notice of at least 30 days must be provided to the individual before coverage may be cancelled.
Under the PPACA and the interim final regulations, plans or health insurance coverage with a network of providers are subject to certain requirements relating to the choice of a health care professional. Specifically, plan participants are permitted to select as their provider any primary care provider that participates in the plan's network. For children, parents may select any participating pediatrician as a child's primary care provider. Additionally, plans or issuers may not require a referral for obstetrical or gynecological care. The interim final regulations add the requirement that the plan or issuer inform participants of these rights. The notice should be included with the summary plan description.
The regulations provide the following model notices:
- For plans and issuers that require or allow for the designation of primary care providers by participants or beneficiaries:
"[Name of group health plan or health insurance issuer] generally [requires/allows] the designation of a primary care provider. You have the right to designate any primary care provider who participates in our network and who is available to accept you or your family members. [If the plan or health insurance coverage designates a primary care provider automatically, insert: Until you make this designation, [name of group health plan or health insurance issuer] designates one for you.] For information on how to select a primary care provider, and for a list of the participating primary care providers, contact the [plan administrator or issuer] at [insert contact information]."
- For plans and issuers that require or allow for the designation of a primary care provider for a child:
"For children, you may designate a pediatrician as the primary care provider."
- For plans and issuers that provide coverage for obstetric or gynecological care and require the designation by a participant or beneficiary of a primary care provider:
"You do not need prior authorization from [name of group health plan or issuer] or from any other person (including a primary care provider) in order to obtain access to obstetrical or gynecological care from a health care professional in our network who specializes in obstetrics or gynecology. The health care professional, however, may be required to comply with certain procedures, including obtaining prior authorization for certain services, following a pre-approved treatment plan, or procedures for making referrals. For a list of participating health care professionals who specialize in obstetrics or gynecology, contact the [plan administrator or issuer] at [insert contact information]."
If a plan or health insurance coverage provides emergency services, the following requirements must be met:
- Coverage must be provided without the individual or health care provider having to obtain prior authorization (even if the services are provided out of network) and without regard to whether the health care provider is an in network provider
- If the plan or health insurance coverage has a network of providers, the plan or issuer may not impose any administrative requirement or limitation on benefits for out of network emergency services that is more restrictive than the requirements or limitations that apply to in network emergency services
- If the plan or health insurance coverage has a network of providers, cost sharing requirements expressed as a copayment amount or coinsurance rate imposed for out of network emergency service cannot exceed the cost sharing requirements that would be imposed if the services were provided in network. A plan or issuer satisfies this requirement if it provides benefits for out of network emergency services in an amount equal to the greatest of three possible amounts:
- The amount negotiated with in network providers for the emergency service furnished;
- The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out of network services (such as the usual, customary, and reasonable charges) but substituting the in network cost sharing provisions for the out of network cost sharing provisions; or
- The amount that would be paid under Medicare for the emergency service.
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