EBSA Issues FAQs on Health Care Reform Implementation

EBSA, FAQs regarding Affordable Care Act Implementation Compliance, 9/20/2010

DOL's Employee Benefits Security Administration (EBSA) has issued a series of frequently asked questions addressing various implementation issues arising under the Affordable Care Act with respect to grandfathered health plans, claims and internal and external appeals, dependent coverage, and out-of-network emergency services.

EBSA, IRS, and HHS are working together with employers, issuers, states, providers, and other stakeholders to help them come into compliance with the new law, EBSA said. For the three departments, compliance assistance is a high priority, and their approach to implementation emphasizes assisting (rather than imposing penalties on) plans, issuers, and others that are working diligently and in good faith to understand and come into compliance with the new law. (Q1)

Among the issues addressed by the FAQs are the following:

Grandfathered plans. Addressing the interim final regs applicable to grandfathered plans (see RIA Pension and Benefits Week 6/21/2010), EBSA responded to a concern from some issuers that they do not always have the information needed to know whether (or when) an employer plan sponsor changes its rate of contribution towards the cost of group health plan coverage. EBSA stated that an insured group health plan that is a grandfathered health plan will continue to be considered a grandfathered health plan, if, no later than January 1, 2011 for policies renewed before January 1, 2011, issuers—

• Require a plan sponsor upon renewal, to make a representation regarding its contribution rate for the plan year covered by the renewal, as well as its contribution rate on March 23, 2010, and

• Have policies, certificates, or contracts of insurance that disclose in a prominent and effective manner that plan sponsors are required to notify the issuer if the contribution rate changes at any point during the plan year.

However, this relief will no longer apply as of the earlier of: (a) the first date on which the issuer knows that there has been at least a five-percentage-point reduction, or (b) the first date on which the plan no longer qualifies for grandfathered status without regard to the five-percentage-point reduction. (Q2)

Similarly, with respect to multiemployer plans, if multiemployer plans and contributing employers follow steps similar to those outlined above, the same relief will apply to the multiemployer plan unless or until the multiemployer plan knows that the contribution rate has changed. (Q3)

Claims, internal appeals, and external review. Following up on the interim final regs addressing the Affordable Care Act's rules on claims processing, internal appeals, and external review (see RIA Pension and Benefits Week 7/26/2010), as well as Technical Release 2010-01 (see RIA Pension and Benefits Week 8/30/2010), EBSA stated that, among other things, plans that do not strictly comply with all the standards set forth in the technical release may in some circumstances still be considered to be in compliance with PHSA Sec. 2719(b). Here, compliance will be determined on a case-by-case basis under a facts and circumstances analysis. For example, a self-insured group health plan's failure to contract with at least three independent review organizations (IROs) does not mean that the plan has automatically violated PHSA Sec. 2719(b). Instead, a plan may demonstrate compliance via other steps taken to ensure that its external review process is independent and without bias. (Q8)

EBSA also said that the technical release does not require a plan to contract directly with any IRO. Instead, the requirements are met where a self-insured plan contracts with a third-party administrator that, in turn, contracts with an IRO. However, such a contract does not automatically relieve the plan from responsibility if there is a failure to provide an individual with external review. (Q9)

Furthermore, EBSA made it clear that an IRO is not required to be in the same state as the plan. Rather, plans may contract with an IRO in another state. (Q10)

Dependent coverage. According to EBSA, a group health plan or issuer does not fail to satisfy PHSA Sec. 2714 and the interim final regs on dependent coverage (see RIA Pension and Benefits Week 5/17/2010) merely because the plan or issuer conditions health coverage on support, residency, or other dependency factors for individuals under age 26 who are not described in Code Sec. 152(f)(1). Thus, a plan may limit health coverage for children until the child turns 26 to sons, daughters, stepchildren, adopted children (including children placed for adoption), and foster children, while imposing additional conditions on eligibility, such as a condition that the individual be a dependent for income tax purposes–for individuals not described in Code Sec. 152(f)(1), such as a grandchild or niece. (Q14)

Out-of-network emergency services. The interim final regs under PHSA Sec. 2719A set forth minimum payment standards to ensure that a plan or issuer does not pay an unreasonably low amount to an out-of-network emergency service provider who, in turn, could simply bill the balance to the patient (see RIA Pension and Benefits Week 6/28/2010). According to EBSA, these minimum payment standards are not intended to apply in circumstances where state law prohibits balance billing. Similarly, if a plan or issuer is contractually responsible for any amounts balance billed by an out-of-network emergency services provider, the plan or issuer does not have to satisfy the payment minimums. However, in either case, patients must be provided with adequate and prominent notice of their lack of financial responsibility with respect to such amounts. In addition, even if state law prohibits balance billing, or if the plan or issuer is contractually responsible for amounts balance billed, the plan or issuer may not impose any copayment or coinsurance requirement that is higher than the copayment or coinsurance requirement that would apply if the services were provided in network. (Q15)

All the FAQs can be viewed on the EBSA website at http://www.dol.gov/ebsa/faqs/faq-aca.html.