Contraception Coverage under the ACA’s Preventive Services Coverage Requirements, and Employer Implementation: An Update
Posted on April 20, 2012 | Comment (1)
This update to our March 2012 implementation brief reviews recent implementation efforts by the Administration in connection with coverage of contraceptives as a required element of required preventive services for all individual and (non-grandfathered) group health plans under the Affordable Care Act. The earlier brief reviewed the Administration’s final rules defining the scope of contraception coverage, as well as the scope of the religious exemption that would apply to employers that seek an exemption from this coverage requirement. Reflecting prior law on this matter, the final rule preserved the narrower religious exemption contained in the 2010 Interim Final rule governing employer obligations with respect to preventive services. As such, the exemption focuses on employers whose mission is the advancement and teaching of religion and does not cover religiously affiliated employers, such as hospitals or universities, that may be affiliated with religious institutions but whose activities are secular in nature. The final rule further indicated that the Administration would develop an implementation approach for non-exempt employers with religious or moral objections that attempts to accommodate these objections in the design of applicable federal contraceptive coverage standards.
In the case of employers that purchase group health insurance, the rule specifies that in order to avoid situations in which non-exempt employers with religious or moral objections are forced to purchase contraceptive coverage, issuers selling group health insurance products will be required to include coverage of contraceptives without cost-sharing as an employee benefit and at no cost to the employer. However, this approach does not work in the case of “self-funded” employers that act as their own insurers. Therefore, on March 21, 2012, the Departments of the Treasury, Labor and Health and Human Services (the Departments) issued an Advance Notice of Proposed Rulemaking (ANPRM) to begin the process of creating an approach that will work employers that self-insure.
March 2012 ANPRM
The ANPRM seeks comment on possible approaches in the case of non-exempt employers, as defined in the 2010 Interim Final Rule and seeks to balance two stated goals: 1) maintaining “the provision of contraceptive coverage without cost sharing for group health plan participants and beneficiaries covered under a plan sponsored by a non-exempt, non-profit religious organization that has religious objections to contraceptive coverage, in the simplest way possible;” and 2) protecting “such religious organizations from having to contract, arrange, or pay for contraceptive coverage.”
Consistent with the February 2012 final rule, the ANPRM proposes that that issuers of group health insurance products purchased by non-exempt, non-profit religious organizations simply include contraceptive coverage without cost-sharing free of charge. In the case of self-insured plans, the ANPRM suggests that one possible approach would be to have entities that act as third-party administrators (TPA) of self-insured group health plans (a function typically carried out for larger employers by the same companies that also sell insured products) offer such coverage free of charge to the self-insuring employer as part of the TPA product itself. In order to invoke this accommodation, a religious organization would have to self-certify that it meets the criteria to be eligible for the accommodation. Its self-certification in turn would trigger the TPA’s responsibility to provide contraceptive coverage with no cost sharing to the employees of the organization. In such a case, the contraceptive coverage technically would not be part of the plan sponsored by the employer but would be available through the TPA, and the TPA would be expected to both cover contraceptives without cost-sharing and notify participants of the availability of the coverage. The cost would be borne by plan savings from efficient administration or by other sources of funding.
Questions for Comment
Some of the key questions on which the Departments seek comment are:
- Which religious organizations should be eligible for the accommodation? Should for-profit employers be accommodated as well as non-profit employers?
- Should employers that provide coverage for some, but not all, forms of contraceptives be allowed to invoke the accommodation with respect to the forms they do not cover?
- How can the contraceptive coverage be funded without using funds from religious organizations? Suggestions include: drawing funds from the ACA’s reinsurance program designed to balance risk selection from 2014 through 2016; having the TPA arrange for contraceptive coverage separately through another independent entity such as an insurer; and having a private, non-profit organization pay for the contraceptive services for beneficiaries.
- How will the proposed regulations interact with state laws that may have a broader religious exemption?
- How many religious organizations, insurance issuers, TPAs, and beneficiaries will be affected and what are the average costs and savings of providing contraceptive coverage for affected beneficiaries?
A separate question is what happens to beneficiary and participant appeals and coverage rights? Under the Employee Retirement Income Security Act (ERISA), which governs health benefit plans operated by private employers, participants and beneficiaries have important protections in relation to benefits and services offered by their group health plans, such as the right to appeal the denial of coverage under the plan. Since the ANPRM suggests that this coverage technically might fall outside of the group health plan, what appeals rights would be available in the case of a coverage denial?
 45 CFR § 147.130(iv)(B). As added by Departments of Treasury, Labor, and Health and Human Services. Interim Final Rules with Request for Comments: Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act. 76 Fed. Reg. 46621 (August 3, 2011). Available at: http://www.gpo.gov/fdsys/pkg/FR-2011-08-03/pdf/2011-19684.pdf.
 Departments of Treasury, Labor, and Health and Human Services. Advance Notice of Proposed Rulemaking. Certain Preventive Services Under the Affordable Care Act, 77 Fed. Reg. 16501 (Mar. 21, 2012). http://www.gpo.gov/fdsys/pkg/FR-2012-03-21/pdf/2012-6689.pdf.
 Departments of Treasury, Labor, and Health and Human Services. Final Rules: Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act, 77 Fed. Reg. 8725 (Feb. 15, 2012). http://www.gpo.gov/fdsys/pkg/FR-2012-02-15/pdf/2012-3547.pdf.
 77 Fed. Reg. 16501, at 16503.