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New Health Care Reform Guidance

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  • New Health Care Reform Guidance

    The EBSA website contains a series of links to guidance on implementation of health care reform. A new FAQ release addresses a number of issues including automatic enrollment requirements, mental health parity rules and disclosure and nondiscrimination requirements. The guidance is available here.

    Of particular interest is another insight on retaining a plan's grandfathered status:
    Q7: My plan terms include out-of-pocket spending limits that are based on a formula (a fixed percentage of an employee’s prior year compensation). If the formula stays the same, but a change in earnings results in a change to the out-of-pocket limits such that the change exceeds the thresholds allowed under paragraph (g)(1) of the interim final regulations relating to grandfathered health plans, will my plan relinquish grandfather status?

    No. The Departments have determined that if a plan or coverage has a fixed-amount cost-sharing requirement other than a copayment (for example, a deductible or out-of-pocket limit) that is based on a percentage-of-compensation formula, that cost-sharing arrangement will not cause the plan or coverage to cease to be a grandfathered health plan as long as the formula remains the same as that which was in effect on March 23, 2010. Accordingly, if the percentage-of-compensation formula for determining an out-of-pocket limit is unchanged and an employee’s compensation increases, then the employee could face a higher out-of-pocket limit, but that change would not cause the plan to relinquish grandfather status.
    And also, I found interesting a couple of points on disclosure requirements. First, the new requirements regarding disclosure of modifications to the plan are not effective just now, as a reading of statute clearly indicates. But the existing rules for disclosure of material modifications to a plan remain in effect. That is perhaps not particularly surprising, but it bears noting.

    Second, the agencies are of the opinion that medical necessity criteria constitute plan information for purposes of ERISA Section 104(b).

    Q10: I was denied benefits for mental health treatment by my plan because the plan determined that the treatment was not medically necessary. I requested and received a copy of the criteria for medical necessity determinations for mental health and substance use disorder treatment, and the reason for denial. I think my plan is applying medical necessity standards more strictly to benefits for mental health and substance use disorder treatment than for medical/surgical benefits. How can I obtain information on the medical necessity criteria used for medical/surgical benefits?

    Under ERISA, documents with information on the medical necessity criteria for both medical/surgical benefits and mental health/substance use disorder benefits are plan documents, and copies of plan documents must be furnished within 30 days of your request. See ERISA regulations at 29 CFR 2520.104b-1. Additionally, if a provider or other individual is acting as a patient’s authorized representative in accordance with the Department of Labor’s claims procedure regulations at 29 CFR 2560.503-1, the provider or other authorized representative may request these documents. If your plan is not subject to ERISA (for example, a plan maintained by a State or local government), you should check with your plan administrator.
    This inclusion of medical necessity criteria in the scope of "plan information" subject to disclosure requirements warrants review of these procedures and the availability of documents containing this criteria upon request.
    Harmon & Major, P.A.
    Greenville, SC
    Health Plan Law