Date:September 3, 2010
To:All Insurers Writing Individual and Group Health Insurance
From:Sean Dilweg, Commissioner of Insurance
Subject:Patient Protection and Affordable Care Act of 2009

This bulletin is the second in a series to provide information to insurers about the Patient Protection and Affordable Care Act of 2009 (PPACA) as modified by the Health Care and Education Reconciliation Act of 2010 (HCERA). Additional bulletins will follow as more information is available. The bulletin also notes when both state and federal reform co-exist. The Office of the Commissioner of Insurance (OCI) will enforce compliance with whichever component of state and federal law is most favorable to Wisconsin consumers through review of form filings pursuant to s. 631.20, Wis. Stat., and by requesting information pursuant to s. 601.42, Wis. Stat.

On July 1, 2010, the U.S. Department of Health and Human Services (HHS) launched its HealthCare.gov website, which includes an implementation center section with links to the federal regulations and information and materials related to implementation.

The following discusses PPACA and HCERA information following publication of the OCI's May 3, 2010, bulletin and highlights Wisconsin state law as applicable. The PPACA and HCERA use "group health plan" as it is defined in title XXVII of the Public Health Service Act, part 7, of Employee Retirement Income Security Act (ERISA) and includes both insured and self-insured group health plans. The term is distinct from "health plan" that as defined does not include self-insured group health plans but does include group and individual health insurance issuers. This bulletin uses the terms expressed in the federal law and regulations but will add terms used in Wisconsin law for clarification.

Grandfathered Health Plans

An interim final rule and proposed rule regarding Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act was published June 17, 2010. The rule delineates how group health plans and individual health insurance policies qualify to be considered grandfathered plans; what modifications can and cannot be made to a plan without the plan losing the designation of grandfathered; and reporting and notice requirements for plans while determined to be a grandfathered plan and provisions of the PPACA and HCERA that apply regardless of grandfather status. To be considered a grandfathered group health plan or a grandfathered health plan, plans must have existed as of March 23, 2010, and as long as the plan qualifies it can maintain its grandfather status indefinitely. Grandfathered plans are subject only to certain provisions of the PPACA. The rule contains highly detailed information regarding triggering events that will modify the plan's designation as a grandfathered plan. It also clarifies that changes to plans in order to comply with federal or state legal requirements and to voluntarily comply with PPACA requirements will not result in losing their grandfathered status. A table delineating provisions of PPACA and HCERA that apply to grandfathered group and individual health plans is contained in the Federal Register Vol. 75, No. 116, at page 34542. Insurers maintaining grandfathered plans should read the interim final rule carefully.

Under Wisconsin law, group plans and individual health insurance policies continue to be subject to state law and regulations when not explicitly preempted. Insurers must continue to comply with state mandated benefits including newly enacted mandates contained in 2009 Wisconsin Acts 14, 28, 218, 282, and 346, as applicable. Bulletins regarding these Wisconsin Acts are available at http://oci.wi.gov/bulletin.htm.

Dependent Coverage of Children to Age 26

An interim final rule and proposed rule regarding Group Health Plans and Health Insurance Issuers Relating to Dependent Coverage of Children to Age 26 Under the Patient Protection and Affordable Care Act was published May 13, 2010. The rule implements the requirements for dependent coverage and defines the dependents to which coverage shall be made available. The rule clarifies coverage may not be conditioned on whether a child under the age of 26 is a dependent under the Internal Revenue Code or a full-time student, that separate premiums and benefits for covered children are not allowed if they are based solely on the age of a child, and that the coverage may not be limited based on whether a child is married. Further, the terms of the plan or coverage offered to adult dependents must be the same for all dependents regardless of age. The rule also requires a special enrollment opportunity and notice. The rule applies for plan years beginning on or after September 23, 2010, or January 1, 2011, for calendar year plans.

The interim rule applies to grandfathered group health plans but provides an exception from compliance if the adult child is eligible to purchase group health coverage through an employer. PPACA and HCERA do not include exceptions for grandfathered individual health policies. On and after January 1, 2014, all grandfathered group health plans must fully comply with PPACA and HCERA. HHS published a Fact Sheet and Frequently Asked Questions available at http://www.hhs.gov/ociio/regulations/dependent/index.html.

The interim final rule provides that state laws that impose stricter requirements than imposed by the federal law are not preempted. Therefore, s. 632.885, Wis. Stat., effective January 1, 2010, which requires most health insurance policies and Wisconsin self-funded governmental health plans to provide coverage to eligible adult children up to 27 years of age is not preempted. Provisions in state law and regulation that are not preempted include:

  • Wisconsin's requirement of eligibility to age 27.
  • Wisconsin's requirement to age 27 unless called to active duty before attaining age 27 as described in s. 632.885 (2) (b), Wis. Stat., and s. Ins 3.34 (6) (a) 2., Wis. Adm. Code.
  • For plans considered to be grandfathered group health insurance plans under the terms of the federal law, the grandfathered group health plan must comply with Wisconsin's eligibility criteria established in s. 632.885 (2) (a) 3, Wis. Stat., and s. Ins 3.34 (6) (a) 1, Wis. Adm. Code.

Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections

A final rule and proposed rule regarding Requirements for Group Health Plans and Health Insurance Issuers Under the Patient Protection and Affordable Care Act Relating to Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections was published June 28, 2010. The rule applies to both group plans and individual policies. It does not apply to stand-alone dental or vision plans or to retiree plans. HHS published a Fact Sheet available at http://www.healthreform.gov/newsroom/new_patients_bill_of_rights.html.

Preexisting Condition Exclusions

The rule provides that covered individuals who are under the age of 19 may not be subject to exclusion from benefits available under the plan or policy due to a preexisting condition. The rule applies for plan years beginning on or after September 23, 2010, or January 1, 2011, for calendar year plans. The rule applies to grandfathered group health plans but does not apply to grandfathered individual policies.

HHS published Questions and Answers on Enrollment of Children Under 19 Under the New Policy That Prohibits Pre-Existing Condition Exclusions available at http://www.hhs.gov/ociio/regulations/children19/factsheet.html. It clarifies that issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open-enrollment periods if allowed under state law. The rule states that an enrollee under age 19 cannot be denied enrollment or specific benefits based on a preexisting condition. HIPAA rules regarding preexisting condition exclusions continue in effect, except for children under age 19, until January 1, 2014. For plan or policy years beginning on or after January 1, 2014, a plan or policy may not apply preexisting condition exclusions and may not discriminate based on health status regardless of the enrollee's age.

Currently under Wisconsin insurance law, preexisting condition exclusions are permitted for a 12-month period or 18 months for late enrollment. The federal interim rule preempts Wisconsin law as to persons under age 19 on or after September 23, 2010. Wisconsin insurance law does not prohibit open-enrollment periods for individual coverage as contemplated under the federal rules.

Lifetime and Annual Limits

The rule prohibits a group plan or individual policy from applying annual limits on benefits but does not prohibit annual or lifetime dollar limits with respect to benefits that are not essential benefits specified by the plan or policy.

PPACA and applicable regulations provide that the essential health benefits package must cover the following general categories of services:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance abuse disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

The scope of benefits is to be determined by the HHS and equal to the scope of benefits under a typical employer-based plan.

The rule applies beginning with the first plan or policy year on or after September 23, 2010. For plan or policy years beginning before January 1, 2014, a plan or policy may impose annual minimum limits on essential benefits only if they are no less than amounts specified in the rule as follows: for plans issued or renewed beginning September 23, 2010, annual limits no lower than $750,000; for plan years beginning on or after September 23, 2011, this minimum limit will be raised to $1.25 million; and for plan years beginning on or after September 23, 2012, to $2 million. These limits apply to all employer plans and all new individual market plans. For plans issued or renewed on or after January 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited. Insurers are required to provide a notice and provide an enrollment opportunity to those individuals who had previously been denied coverage or were disenrolled after reaching a lifetime maximum. These individuals must be given at least a 30-day enrollment period and treated as special enrollees beginning not later than the first day of the first plan year on or after September 23, 2010. The benefit package offered must be the same as similarly situated enrollees who have not previously reached the lifetime maximum.

The lifetime limits apply to grandfathered group plans and individual policies. The annual limits apply to grandfathered group plans, but do not apply to grandfathered individual policies.

Wisconsin insurance law includes statutory mandates that provide for a minimum dollar amount of coverage. Except for Wisconsin's mandate requiring coverage of nervous and mental disorders and alcoholism and other drug abuse problems, federal law does not clarify whether other Wisconsin mandates would be considered essential benefits. Insurers may continue to use policies with the mandated coverage dollar limits. Insurers filing new forms for use in Wisconsin may include variable language and bracket these dollar amounts and annual dollar limitations with an indication in the filing that dollar amounts or limits will change subject to federal health reform regulations.

Rescissions

The rule provides that a group plan or individual policy may not be rescinded except in the case of fraud or an intentional misrepresentation of a material fact. The rule also provides that, for group coverage, the plan or issuer must provide at least 30 calendar days advance notice to an individual before coverage may be rescinded. The rule is effective beginning with the first plan or policy year on or after September 23, 2010, or January 1, 2011, for calendar year plans. Grandfathered group health plans and grandfathered individual policies are subject to the rule regarding rescission and the advance notice requirement.

Currently under Wisconsin insurance law, rescission in cases of fraudulent misrepresentation pursuant to s. 632.76, Wis. Stat., are permitted. The federal interim rule preempts Wisconsin law as the federal law is more protective requiring the fraudulent misrepresentation to be intentional, requires advance notice and can be retroactive for one year.

Patient Protections

The rule provides that a group plan or individual policy that requires designation of a participating primary care provider must permit covered individuals to designate any primary care provider who is available to accept the individual. It also provides that coverage of emergency services may not be subject to prior authorization or to whether the emergency services are in-network or out-of-network. In addition, the rule requires that notice be provided to covered individuals informing them of their rights to choose a primary care provider or pediatrician and to obtain obstetrical and/or gynecological care without prior authorization. The rule is effective beginning with the first plan or policy year on or after September 23, 2010, or January 1, 2011, for calendar year plans. The rule does not apply to grandfathered plans.

Wisconsin insurance law regarding choice of provider and access to obstetrical or gynecological care without prior authorization, ch. 609, Wis. Stat., and s. Ins 9, subch. III, Wis. Adm. Code, contains similar provisions to federal law. Access to emergency services is contained at s. 632.85, Wis. Stat., and s. Ins 9.38 (4), Wis. Adm. Code.

Internal Claims and Appeals and External Review

Interim final rules regarding Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care Act were published July 23, 2010. The rules are effective for plan or policy years beginning on or after September 23, 2010. The rules do not apply to grandfathered plans.

The interim rules for internal review include the following new requirements:

  • A broad definition of adverse benefit determination including rescission.
  • Notification of benefit determination that must be provided as soon as possible in urgent situations, not to exceed 24 hours.
  • A full and fair review, including insurers providing, free of charge, the insured with any new or additional evidence considered in the benefit determination as soon as possible.
  • Criteria for avoiding conflicts of interest including employment decisions.
  • Standards for the notification: culturally and linguistically appropriate manner, sufficient information to identify the claim, description of the plan's standards, description of available internal and external review processes, availability of and contact for insurance consumer assistance that may include OCI.
  • Failure to strictly adhere to the requirements for internal review deems the internal review process to be exhausted therefore allowing the insured to commence the external review process.
  • Continued coverage for the insured pending the outcome of the internal appeal.

The interim rules for external review rely upon the NAIC Uniform Health Carrier External Review Model Act. For states, including Wisconsin, with existing external review laws, the interim final rules are first effective July 1, 2011. The external review requirements do not preclude more consumer-friendly provisions. The interim rules state that external review determinations apply to and are binding upon self-insured plans including state governmental bodies and church-based plans that are not subject to ERISA preemption. The interim rules incorporate consumer protections as provided in the NAIC Model Act including:

  • Review of adverse determinations.
  • Effective written notice.
  • Exhaustion of internal appeals prior to external review except when any of the following occur:
    • The insurer waives exhaustion requirement
    • Insured has been deemed to have exhausted internal review appeals
    • Insured requested an expedited external review.
  • Insurers pay for the external review.
  • States cannot impose a minimum dollar amount of a claim eligible for external review.
  • External review organizations must be assigned on a random basis.
  • Decision binding upon the plan or insurer and may be binding on the insured except to the extent other remedies are available under state or federal law.
  • Insurers' policies or certificates must contain description of external review process substantially similar to the NAIC Model Act section 17.
  • Procedures for experimental or investigational treatment determinations to be substantially similar to the NAIC Model Act section 10.

The NAIC model act is available at http://www.naic.org/documents/committees_b_uniform_health_carrier_ext_rev_model_act.pdf (opens in new window). The HHS model notices are available at http://www.hhs.gov/ociio/regulations/consumerappeals/index.html.

2009 Wisconsin Act 28 amended existing independent review definitions and procedures incorporating two new triggering events and reporting requirements. The Act included new terms, "coverage denial determination," "preexisting condition exclusion denial" and "rescission determination." Insureds now have independent review rights for preexisting condition exclusion denials and rescission determinations. Based upon the changes in 2009 Wis. Act 28, ch. Ins 18, Wis. Adm. Code, was amended and will be effective October 1, 2010. The rule is available at: http://oci.wi.gov/rules/1800fn10.pdf (opens in new window). Further, for internal reviews, s. Ins 18 subch. II, Wis. Adm. Code, permits internal appeal rights related to any dissatisfaction and is not limited to adverse benefit determinations. Portions of Wisconsin regulations will need to be modified to incorporate the greater level of consumer protection contained in the PPACA and federal rules related to notice, provision of materials, and full and fair review.

As stated previously, since Wisconsin has existing statutes and regulations pertaining to external review, the federal interim rules for external review are effective July 1, 2011. Wisconsin laws for internal and external review will be amended to conform with federal law.

Coverage of Preventive Services

Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services under the Patient Protection and Affordable Care Act were published July 14, 2010. The rules apply to group plans and individual policies and provide guidance regarding the treatment that qualifies as recommended preventive items and services, and provide that these plans may not impose any cost-sharing requirements with respect to the currently identified items and services. A list of covered preventive services is included within the interim final rules available at: http://edocket.access.gpo.gov/2010/pdf/2010-17242.pdf (opens in new window). The recommended services are available at: http://www.healthcare.gov/law/about/provisions/services/lists.html. The list may be modified from time to time by the Department of Health and Human Services (HHS). Insurers are required to comply with the current recommendations and a 60-day prior notice of changes to this list will be provided. The rules address cost-sharing that may be imposed for office visits and out-of-network providers as well as medical management techniques that insurers may use. Group plans and individual policies continue to have the option to cover preventive services in addition to those provided by PPACA and applicable regulations and may apply cost-sharing to these additional preventive services. The rules apply beginning with the first plan year commencing on or after September 23, 2010, or January 1, 2011, for calendar year plans. The rules requiring coverage of recommended preventive services without cost-sharing do not apply to grandfathered plans.

Currently Wisconsin Insurance mandates primarily located within s. 632.895, Wis. Stat., contain mandated coverage that is similar to the identified preventive services contained within the federal rules. Wisconsin will be preempted from permitting cost-sharing provisions currently contained in the mandates.

2010 Standards for Health Insurers' Medical Loss Ratios

Medical Loss Ratio Form

On August 17, 2010, the NAIC approved final implementation of the Supplemental Health Care Exhibit. This is a supplemental schedule to the Statutory Financial Annual Statement and is to be filed by April 1st of each year beginning with the 2010 Financial Annual Statement. The purpose of this supplemental exhibit is to assist state and federal regulators in identifying and defining elements that make up the medical loss ratio and for purposes of submitting a report to HHS. The supplemental exhibit is also intended to track and compare financial results of health care business as reported in the annual financial statements. Additional information about the new Supplemental Health Care Exhibit is available on the NAIC website at http://www.naic.org/index_health_reform_section.htm.

PPACA Form Filing Requirements

Companies are required to submit a PPACA Uniform Compliance Summary with subject form filings in order to comply with the immediate market reform requirements of PPACA. These PPACA requirements apply only to policies for health insurance coverage referred to as "major medical" in the Act, which is comprehensive health coverage that includes PPO and HMO coverage.

On June 9, 2010, the System for Electronic Rate and Form Filing (SERFF) released into production support for PPACA filings. Companies now have the ability to mark filings as PPACA eligible. When a filing is so designated, a field designed to capture the PPACA provision for which the filing is being made will be displayed. Companies will be required to complete this field on all new submissions.

OCI has posted on the company policy form and rate filings section of our website http://oci.wi.gov/company/forms-policy.htm#ppaca information to assist insurance companies in filing by September 23, 2010, PPACA compliant forms. The information includes instructions for companies submitting paper filings and for companies that submit electronic filings using SERFF.

Health Care Reform Insurance Web Portal

An interim final rule establishing a website through which individuals and small businesses can obtain information about the insurance coverage options that may be available to them in their state was issued on May 5, 2010. The rule adopts the categories of information that will be collected and displayed via the website and the data that HHS will require from issuers and request from states, associations, and high-risk pools in order to create the content. HHS published a Fact Sheet available at http://www.hhs.gov/ociio/regulations/webportal/index.html.

The HHS web portal went live on July 1, 2010, and includes information by state and zip code regarding health plans accepting new applicants. Beginning October 1, 2010, the HHS web portal will expand to include benefit information and price estimates for health plans. HHS continues to work directly with companies to obtain the information necessary to launch phase two of the HHS web portal.

Federal Pre-Existing Condition Insurance Plan [HIRSP Federal Plan]

An interim final rule regarding the Pre-Existing Condition Insurance Plan Program, which is a program to create temporary high-risk health insurance pools that offer affordable health insurance coverage to uninsured individuals with preexisting conditions, was published July 30, 2010. The rule implements the administration, eligibility and enrollment, benefits, premiums, funding, appeals and oversight rules of the preexisting condition insurance plan program.

Wisconsin created the HIRSP Federal Plan effective August 1, 2010, as its temporary preexisting condition insurance plan. Insurers are reminded of their continued obligation under s. 632.785, Wis. Stat., to notify persons they make eligible of the existence of the high-risk health insurance pool.

Early Retiree Reinsurance Program (ERRP)

An interim final rule implementing the Early Retiree Reinsurance Program was published May 5, 2010. The rule creates a temporary program that reimburses sponsors of participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses, and dependents. The program became effective June 1, 2010, and will end no later than January 1, 2014.

On June 29, 2010, the U.S. Department of Health and Human Services (HHS) published the official ERRP Program Application and instructions. HHS has also published a Fact Sheet and Frequently Asked Questions available at http://www.hhs.gov/ociio/regulations/errp/index.html.


Please submit any questions regarding the information in this bulletin in writing to ocicomplaints@wisconsin.gov.