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New health reform rules specify minimum annual limits, provide model language for patient protections

Minimum annual dollar limits for health plans in 2010 through 2013 were established in interim final regulations announced on June 23, 2010, by the Internal Revenue Service, the Employee Benefits Security Administration (EBSA), and the Department of Health and Human Services.

The interim final regulations provide detailed guidance on four separate health insurance provisions in the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148), as follows:

  • Prohibition of preexisting condition exclusions (Public Health Service Act (PHSA) Sec. 2704);
  • No lifetime or annual limits (PHSA Sec. 2711);
  • Prohibition on rescissions (PHSA Sec. 2712); and
  • Patient protections (PHSA Sec. 2719A).

The interim final rules are effective August 27, 2010. The rules are applicable to plan years beginning on or after September 23, 2010.

Preexisting condition exclusions. The interim final rule defines preexisting condition exclusions, which are banned under the PPACA, as follows:

Preexisting condition exclusion means a limitation or exclusion of benefits (including a denial of coverage) based on the fact that the condition was present before the effective date of coverage (or if coverage is denied, the date of the denial), whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that day. A preexisting condition exclusion includes any limitation or exclusion based on a pre-enrollment questionnaire or physical examination given to the individual, or review of medical records relating to the pre-enrollment period.

Annual and lifetime benefits. The PPACA prohibits lifetime benefit limits and bans annual limits with exceptions until 2014.

The interim rules clarify that restriction on annual limits does not apply to health flexible spending arrangements (FSAs), medical savings accounts (MSAs), or health savings accounts (HSAs).

In regard to the annual limit exceptions before 2014, a group health plan may establish an annual limit on the dollar amount of benefits that are essential health benefits. The interim rules establish the following minimum limits:

  • $750,000, for a plan year beginning on or after September 23, 2010, but before September 23, 2011;
  • $1,250,000, for a plan year beginning on or after September 23, 2011, but before September 23, 2012;
  • $2,000,000, for plan years beginning on or after September 23, 2012, but before January 1, 2014.

Rescissions. The PPACA prohibits coverage rescissions, defined in the interim final rules as a cancellation or discontinuance of coverage that has a retroactive effect. For example, a cancellation that treats a policy as void from the time of the individual’s or group’s enrollment is a rescission. In another example, a cancellation that voids benefits paid up to a year before the cancellation also is a rescission for this purpose.

A cancellation of coverage is not a rescission if the cancellation has only a prospective effect; or the cancellation of coverage is effective retroactively because of a failure to timely pay required premiums or contributions.

Insurers and plans are required to provide at least 30 days advance notice of a rescission with time to appeal.

Patient protections. The PPACA also requires that plans allow enrollees to select, when the plan requires it, any primary care provider that participates in the plan’s network.

The interim final rules note that plans must notify enrollees of this provision, and the rules provide the following model language that plans may use to comply with this requirement:

(A) For plans and issuers that require or allow for the designation of primary care providers by participants or beneficiaries, insert:

“[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].

(B) For plans and issuers that require or allow for the designation of a primary care provider for a child, add:

“For children, you may designate a pediatrician as the 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 preapproved 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].”

SOURCE: T.D. 9491, June 28, 2010.