Employers can't say they weren't warned.
For the second time in six months, frequently asked question (FAQ) guidance from federal regulators is calling attention to the requirement that employer-sponsored health plans provide coverage for women, without any cost sharing, for the full range of contraceptive methods approved by the U.S. Food and Drug Administration (FDA).
Despite FAQ guidance issued in January 2022, regulators from the U.S. departments of Labor, Health and Human Services, and the Treasury—the agency triumvirate responsible for regulating and enforcing the health-related benefits provisions of the Affordable Care Act (ACA)—say they are receiving continued reports of individuals experiencing difficulty in accessing contraceptive coverage without cost sharing.
Under section 2713 of the Public Health Service (PHS) Act, group health plans and health insurers are required to cover preventive care and screenings under guidelines issued by the Health Resources and Services Administration (HRSA). PHS Act section 2713, originally added by the ACA in 2010, was one of the few provisions in the ACA to take effect upon enactment. The HRSA guidelines currently in effect were issued in 2019 and require broad coverage of contraceptive care and services for women. Updated guidelines issued in late 2021 will take effect on January 1, 2023, for calendar year plans.
As the new FAQ guidance reminds employers, violators of the preventive care coverage requirements may be subject to the $100 per person per day excise tax under section 4980D of the Internal Revenue Code or a civil monetary penalty under PHS Act section 2723. The guidance states that the departments "will take enforcement action as warranted."
Here are some of the key takeaways for employers from the new FAQ guidance, which was issued on July 28, 2022.
Employer-sponsored plans are required to cover both types of emergency contraception that are listed in the HRSA guidelines (levonorgestrel and ulipristal acetate) if prescribed by a medical provider. Plans must cover the medications even if they are available over the counter when prescribed. Plans are also required to cover these products without cost sharing when they are prescribed for advance provision. (Question & Answer [Q&A] 5)
In limited cases, a plan may use "reasonable" medical management techniques for contraceptives not included in the categories used by the HRSA guidelines. Only if "multiple, substantially similar services or products ... are not included" in the HRSA categories "and are medically appropriate for the individual" may a plan use reasonable medical management techniques. A plan would have to cover at least one service or product of that type without cost sharing. (Q&A 3)
Reasonableness of Medical Management Techniques
Reasonableness is determined based on the facts and circumstances. Employer-sponsored plans must provide coverage for at least one form of contraception within each category of the HRSA guidelines and, for categories not described in the HRSA guidelines, "at least one form of contraception" within each group of substantially similar services or products.
Within each category, the plan must provide a process for granting exceptions to the medical management techniques, and that process cannot be "unduly burdensome"—meaning, generally, that it is supposed to be "easily accessible, transparent, and sufficiently expedient." In addition, if a provider determines that a specific service or product is medically necessary for a participant, the plan must cover it without cost sharing. Several types of medical management techniques are highlighted as unreasonable, including denying coverage for brand-name contraceptives that a provider had determined were medically necessary, and imposing an age limit on contraceptive coverage. (Q&A 8)
As noted above, plans must provide an "easily accessible, transparent, and sufficiently expedient exceptions process that is not unduly burdensome" for granting exceptions to otherwise applicable medical management techniques. The departments' guidance provides a safe harbor for the first two criteria. Under the guidance, a process is "easily accessible" if the plan documentation communicates the process (including steps for initiating the process, the information required by the plan to rule on an exception request, and contact information for a plan representative). The process will be considered "transparent" if the exceptions process information is included with the summary plan description and any other materials describing contraceptive items and services. The guidance encourages plan sponsors to provide this information electronically. (Q&A 9)
Preemption of state Laws
The departments' guidance specifically clarifies that federal law requiring plans to cover preventive care (including contraceptives) preempts any contrary state law. If a state refuses to enforce the preventive care mandate, HHS will step in and enforce the coverage requirements. (Q&A 11, 12)
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