Summary

Recent guidance clarifies important issues under the Affordable Care Act, Mental Health Parity and Addiction Equity Act, and Women’s Health and Cancer Rights Act.

In Depth

The US Departments of Labor (DOL), Health and Human Services (HHS) and Treasury (collectively, the Departments) published frequently asked questions (FAQs) on April 20, 2016, clarifying the implementation of the Affordable Care Act (ACA), the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), and the Women’s Health and Cancer Rights Act of 1998 (WHCRA) and their regulations.  The topics addressed in this most recent set of FAQs include coverage of preventive services, rescissions, out-of-network emergency services, coverage for individuals participating in approved clinical trials, cost sharing limitations, mental health parity requirements, and required coverage following a mastectomy.

Coverage of Preventive Services

The ACA requires non-grandfathered group health plans and health insurance issuers in the group and individual markets to provide coverage of certain preventive services recommended by the US Preventive Services Task Force (USPSTF) without any cost-sharing. The subcategories are broken down into evidence-based items or services, immunizations, coverage for children at all stages of growth and women.

Under the FAQs, the Departments clarify that if a colonoscopy is scheduled and performed as a screening procedure pursuant to USPSTF recommendations, plans and issuers may not impose cost sharing for the bowel preparation medications prescribed for the procedure.  The Departments view such medications as an integral part of the preventive screening colonoscopy (when medically appropriate and prescribed) that are therefore required to be covered, subject to reasonable medical management.

In addition, non-grandfathered group health plans and health insurance issuers, as described above, are also required to provide contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity. These most recent FAQs referred to February 20, 2013, and May 11, 2015, FAQs on this subject. Addressing the exceptions process under reasonable medical management for a particular FDA-approved contraceptive method, the Departments state that plans and issuers may develop and utilize a standard exception form and instructions to help ensure that it provides the required process for individuals and medical providers to prescribe a particular contraceptive service or FDA-approved item based on a determination of medical necessity regarding the individual involved.  The FAQs clarify that the Medicare Part D Coverage Determination Request Form may be used as a model form for plans and issuers when developing their standard exception form.

Rescissions

The ACA generally provides that health plans and issuers must not retroactively cancel or discontinue (i.e., “rescind”) coverage except in the case of fraud or when a person makes an intentional misrepresentation of material fact.  Under the FAQs, the Departments provide a relevant example and clarify that a retroactive cancellation or discontinuance of coverage is considered a “rescission” only to the extent it is not attributable to a failure to pay timely premiums towards coverage, due to fraud or intentional misrepresentation of material fact, or in certain other limited circumstances specified in the regulations.

Out-of-Network Emergency Services

Under the ACA, non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage may not impose cost sharing (co-payments or a co-insurance rate) on out-of-network emergency services that is higher than what they impose for in-network emergency services.  The relevant statute, however, does not include in the statutory definition of “cost sharing” the practice of “balance billing,” which refers to the practice of medical providers billing individuals for the difference between (1) the provider’s billed charges, and (2) the amount collected from the health plan or insurance issuer, plus the amount collected from the individual in the form of a copayment or coinsurance amount.  However, while the ACA does not prohibit balance billing (please note however, that some state laws prohibit balance billing), a reasonable amount must be paid by a health plan or insurance issuer before a patient becomes responsible for a balance billed amount.  Thus, the regulations provide that out-of-network emergency services must be covered in an amount at least equal to the greatest of the following three amounts, known as the “minimum payment standards,” adjusted for in-network cost sharing:

(1)   The median amount negotiated with in-network providers for the emergency service

(2)   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 (UCR) amount)

(3)   The amount that would be paid under Medicare for the emergency service

Under the FAQs, the Departments provide that a health plan or issuer is required to disclose to plan participants upon request how it calculated the minimum-payment standard amount, including the usual, customary and reasonable (UCR) amount, for out-of-network emergency services.

Coverage for Individuals Participating in Certain Clinical Trials

Under the ACA, if a non-grandfathered group health plan or health insurance issuer offering non-grandfathered group or individual coverage provides coverage to a qualified individual, then such plan or issuer may not deny participation in or coverage of routine patient costs for items and services furnished in connection with an approved clinical trial with respect to the prevention, detection or treatment of cancer, or another life-threatening disease or condition, and may not discriminate against the individual on the basis of the individual’s participation in the clinical trial.

Clarifying these requirements, the FAQs provide that if a health plan or issuer generally covers chemotherapy to treat cancer, then it may not deny (or limit or impose additional conditions on) coverage for any items or services furnished in connection with participation in an approved clinical trial, which could include, for example, coverage for a new anti-nausea medication.  In addition, the FAQs clarify that if a health plan or issuer typically covers items and services to diagnose or treat complications or adverse events, it may not deny coverage of such items and services when provided to diagnose or treat complications or adverse events in connection with an individual’s participation in an approved clinical trial.

The FAQs clarify that patient costs do not include (1) the investigational item, device or service being studied in the approved clinical trial; (2) items and services that are provided solely to satisfy the clinical trial’s data collection and analysis needs and that are not used in the direct clinical management of the patient; and (3) a service that is clearly inconsistent with widely accepted and established standards of care for a particular diagnosis. In addition, a group health plan, or a health insurance issuer offering group or individual health insurance coverage is not required to provide routine patient care services outside of the plan's (or coverage’s) health care provider network, unless out-of-network benefits are otherwise provided under the plan (or coverage).

Limitations on Cost-Sharing

The ACA provides that any annual cost-sharing imposed under a non-grandfathered group health plan may not exceed the out-of-pocket cost limitations provided for under the ACA.  For plan or policy years beginning in 2016 and 2017, the annual limitation on out-of-pocket costs is set forth in the table below:

Future limits will be increased by a statutorily defined percentage.

The FAQs clarify that if a non-grandfathered large group market or self-insured group health plan pays a fixed amount (sometimes referred to as a “reference price”) for a particular procedure, but does not ensure that participants have adequate access to quality providers that will accept the reference price as payment in full, it is required to count an individual’s out-of-pocket expenses for providers who do not accept the reference price toward the participant’s maximum out-of-pocket limit.

Mental Health Parity and Addiction Equity Act

The MHPAEA generally requires group health plans (or health insurance coverage offered in connection with such a plan) to provide parity between medical and surgical benefits and mental health and/or substance use disorder benefits and provides that mental health and substance use disorder services are essential health benefits.  The Departments published final regulations and FAQs on MHPAEA in November 2013 and has since issued updated guidance in the form of FAQs.  

These most recent FAQs clarify the effect of the ACA on mental health parity by providing the following guidance:

• When performing the “substantially all” and “predominant” tests for financial requirements and quantitative treatment limitations when determining parity under MHPAEA, a health plan or issuer may not base the analysis on an issuer’s entire overall book of business for the year.  The Departments clarify that basing the analysis on an issuer’s entire overall book of business expected to be paid for the year or book of business in a specific region or state is not a reasonable method to determine the dollar amount of all plan payments under MHPAEA.  A self-insured group health plan must generally use plan-specific data when available. For small group insurers, data at the “plan” level rather than at the “product” level must be used, unless the insurer does not have enough data at the plan level. 

•  MHPAEA’s disclosure provisions require that a plan must, upon request, disclose the criteria for medical necessity determinations with respect to mental health or substance use disorder benefits (MH/SUD) to any current or potential participant, beneficiary, or contracting provider upon request and the reason for any denial of reimbursement or payment for services with respect to MH/SUD benefits to the participant or beneficiary, as well as (if an ERISA-covered plan) provide certain documents and plan information to a medical provider acting as an authorized representative for a participant.  The required documents and information in the fact pattern set forth in the FAQs is rather expansive and includes the following:

  • Summary plan description

  • Specific plan language regarding the imposition of a non-quantitative treatment limitation (NQTL)

  • Specific processes, strategies, evidentiary standards and other factors considered by the plan in determining that the NQTL will apply to the MH/SUD benefit at issue

  • Information regarding the application of the NQTL to any medical/surgical benefits within the benefit classification at issue

  • The specific underlying processes, strategies, evidentiary standards and other factors considered by the plan in determining the extent to which the NQTL will apply to any medical/surgical benefits within the benefit classification at issue

  • Any analyses performed by the plan as to how the NQTL complies with the MHPAEA

• The criteria for medical necessity determinations under a group health plan or health insurance coverage with respect to mental health and substance use disorder benefits must be made available to any current or potential enrollee or contracting provider upon request.

• Clarified that MHPAEA applies to any benefits a plan may offer for medication-assisted treatment for opioid use disorder.

• Note that most of the above items are also required to be furnished to plan participants and authorized representatives in connection with adverse benefit determinations under the ERISA claims and appeal procedures applicable to group health plans. 

Women’s Health and Cancer Rights Act

The WHCRA requires that if a group health plan or health insurance issuer offering group or individual health insurance coverage covers mastectomies, the plan or issuer must provide coverage for certain services, in a manner determined in consultation with the attending physician and the patient. Required coverage includes all stages of reconstruction of the breast on which the mastectomy was performed, surgery and reconstruction of the other breast to produce a symmetrical appearance, prostheses, and treatment of physical complications of the mastectomy, including lymphedema.  These new FAQs clarify that nipple and areola reconstruction and repigmentation are a required stage of breast reconstruction under WHCRA.

Implications for Employers

As it has done in the past, the Departments will likely continue to issue additional guidance in the form of FAQ.  These FAQs cover a broad spectrum of ACA related compliance issues and are often fact-specific.  Employers and plan administrators should carefully review each new FAQ as they are released to ensure that their health plan is set up and administered in compliance with this new guidance.  Plan sponsors should also confirm that any third-party administrator to whom it has delegated discretionary authority to decide claims under the group health plan are administering the plan in accordance with the new guidance set forth in these FAQs.  Failure to operate a group health plan in accordance with the insurance market reforms under the ACA can subject employers and health insurance issuers to significant penalties under the ACA, the Public Health Services Act and the Employment Retirement Income Security Act of 1974.