TAX NEWS - 2010

U.S. Tax: Interim final rules address preventive health service coverage required by recent reform

The U.S. Treasury Department, in conjunction with the Departments of Labor and Health and Human Services, issued interim final regulations July 14 for group health plans and health insurance issuers regarding coverage for preventive health services under the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act).

The Affordable Care Act added provisions to the tax code, the Employee Retirement Income Security Act (ERISA), and the Public Health Service (PHS) Act. The PHS Act, as amended, and these new regulations require that a covered group health plan and health insurance issuer offering group or individual health insurance coverage provide benefits for specified items or services without any cost-sharing requirements. The interim final regulations include cites to online lists of "recommended preventive services" as determined by the U.S. Preventive Services Tax Force (USPSTF).


Coverage

These regulations do not apply to grandfathered group health plans. For plan years beginning on or after September 23, 2010 (or one year after the date of any new recommendation or guideline), a nongrandfathered group health plan or group health insurance issuer must provide coverage for all "evidence-based items or services" that have a rating of A or B from the USPSTF. (Most of those ratings have been in effect for at least several years; only one was established in 2010.) In addition to items and services required based on USPSTF ratings, coverage must also be provided for certain routine immunizations for children, adolescents, and adults; certain preventive care and screenings for infants, children, and adolescents; and certain preventive care and screenings for women.

Many of the USPSTF recommendations for services and items are qualified as to a specific group of individuals, generally based on risk, although risk may be based on age. For instance, there are four separate recommendations for cholesterol screening: men aged 35 and older; men aged 20-35 if there is increased risk of coronary heart disease; women aged 45 and older; and women aged 20-45 if there is increased risk of coronary heart disease.


Cost sharing

Generally, plans and issuers are not permitted to impose cost sharing for covered services and items. The interim final rules clarify the "no cost-sharing" mandate as applied to office visits during which recommended preventive services are provided. In that situation, a plan or issuer may impose cost sharing with respect to the doctor's office visit if it is billed separately from the recommended preventive service. If they are not billed separately, and if the primary purpose of the office visit is the delivery of such recommended service, no cost sharing is allowed. If they are not billed separately, and if the primary purpose of the office visit is not the delivery of such recommended service, cost sharing is allowed with respect to the office visit.

The regulations also clarify that a plan or issuer is not required to provide coverage for recommended preventive services delivered by an out-of-network provider. Further, plans and issuers may set reasonable coverage limitations on frequency, methods, or treatments if the recommendation or guideline does not specify those details for any recommended preventive service. Plans and issuers may also impose cost-sharing requirements for preventive services covered in addition to those required to be covered by the PHS Act.


Changes in premiums

The preamble to the regulations includes estimates of increases (or reductions) in health insurance premiums that are anticipated to result because of these changes in required coverage. In general, premiums for enrollees in nongrandfathered plans are expected to increase, but at a rate that is proportionate to the increase in benefits provided. Moreover, the overall increase is expected to be small – less than 2 percent. Within the overall estimated increase in premiums, however, the preamble points to cost reductions for specific services that are expected to result from increased preventive care, particularly the reduced health costs associated with covered obesity screening and weight-loss programs.