1. 21851400 Health Care Reform: Impact on ERISA’s Claims Procedures 1 February 2011 Stacy H. Barrow sbarrow@proskauer.com 617.526.9648 February 2011 © Proskauer

2. 2 Today’s agenda November midterm elections & court cases – where do we go from here? Update on National Health Care Reform ERISA Preemption ERISA’s Documentation Requirement ERISA Claim Procedures Brief Overview of Genetic Information Nondiscrimination Act (GINA) (regulations implementing Title II of GINA effective January 10, 2011) Note: Materials are up-to-date as of February 8, 2011 February 2011 © Proskauer

3. 2010 Elections—What Does It Mean? February 2011 © Proskauer3

4. 2010 Elections—What Does It Mean?  Repeal and Replace  Termination of Funding  Wholesale Changes to Mandates  None of the Above  HR 2, “an Act to repeal the job-killing health care law”  House Resolution 9 "Instructing Certain committees to report legislation replacing the job-killing health care law." February 2011 © Proskauer4

5. Federal Court Cases  About 20 different cases pending  2 Federal Courts: Constitutional  2 Federal Courts: Unconstitutional  Cases primarily focus on individual mandates  Supreme Court will ultimately decide February 2011 © Proskauer5

6. 6 How long does grandfathered status last? New Amendment to Grandfathered Plan Rules ­ A group health plan (and any health insurance coverage offered in connection with the plan) will not lose its grandfathered status merely because the employer enters into a new policy, certificate, or contract of insurance after March 23, 2010 ­ Amendment is effective November 15, 2010, and is not retroactive; meaning that if a plan entered into a new health insurance contract between March 23, 2010 and November 15, 2010, that plan has ceased to be a grandfathered plan ­ For example, if a plan enters into a new insurance contract on September 1, 2010 to be effective January 1, 2011, the amended rule would apply and the plan would remain grandfathered. ­ If, however, the plan entered into a new contract of insurance on June 1, 2010 to be effective September 1, 2010, then the amended rule would not apply and the plan would cease to be grandfathered February 2010 © Proskauer

7. 7 What if your plan is grandfathered? Plan years beginning on or after September 23, 2010 ­ No lifetime limits on essential health benefits ­ Minimum annual limits on dollar value of essential health benefits ­ Coverage of children to age 26 (grandfathered plans may exclude children eligible for other coverage) ­ No rescission except in case of fraud ­ No preexisting condition exclusions for children under age 19 March 23, 2012: ­ Uniform standards for certain benefits communications Plan years beginning on or after January 1, 2014: ­ No annual limit on dollar value of essential benefits, without exception ­ Coverage of children to age 26, regardless of other coverage ­ No preexisting condition exclusions ­ Waiting periods limited to 90 days ­ Changes to wellness plan incentives Mandates for grandfathered and non-grandfathered plans February 2011 © Proskauer

8. 8 What if your plan is not grandfathered? Additional mandates for non-grandfathered plans only: ­ Limits on deductibles and out-of-pocket maximums (2014) ­ Nondiscrimination for insured plans determined under IRC 105(h) ­ Internal and external appeal process rules ­ Coverage of in-network preventive services with no cost-sharing ­ Special rules on choosing primary care provider ­ No prior authorization for OB/GYN visits ­ Coverage of out-of-network emergency services using in-network cost-sharing and no prior authorization requirement ­ Coverage of treatment for those in clinical trials (2014) February 2011 © Proskauer

9. 9 ERISA Preemption ERISA Broadly Preempts State Laws ­ Section 514(a) of ERISA, 29 U.S.C. § 1144(a), provides that the statute will “supersede any and all state laws insofar as they may now or hereafter relate to any employee benefit plan described in ERISA” Savings Clause ­ Saves state insurance (banking and criminal laws) from preemption Deemer Clause ­ States may not “deem” self-funded plans as insured for application of state law purposes Self-funded clients are used to being exempt – but not here On its face, ERISA does not preempt any other federal law February 2011 © Proskauer

10. 10 Plan Documentation Issues ERISA’s Fiduciary Rules ­ Applies equally to retirement plans and welfare plans ­ Key Rule: must operate the plan in accordance with its terms ­ This means that all plan documents must be updated to reflect new PPACA provisions ­ Plan Documents ­ Summary Plan Descriptions ­ Summary Annual Reports ­ Also, under PPACA, new requirement for 2012 – Uniform Explanation of Coverage February 2011 © Proskauer

11. 11 Plan Documentation Issues This Means Documents Must be Updated for: ­ Grandfather Disclaimer (if Grandfathered) ­ Annual and Lifetime Limits (2011 Plan Year) ­ And Enrollment Notice ­ No Rescission of Coverage (2011 Plan Year) ­ No Pre-Existing Condition Exclusions (under 19, 2011 Plan Year; All – 2014) ­ Age 26 Requirement and Enrollment Notice (2011 Plan Year) ­ Preventive Services (2011 Plan Year or after) ­ ERISA Claims Procedures (2011 Plan Year or after) February 2011 © Proskauer

12. 12 Rescission No rescission of coverage ­ Plans cannot rescind coverage once an enrollee is covered except with respect to “an individual who has performed an act or practice that constitutes fraud or makes an intentional misrepresentation of material fact as prohibited by the terms of the plan” ­ Mistake is not fraud or intentional misrepresentation ­ Coverage cannot be cancelled except with prior notice ­ Probably can still terminate a plan or terminate coverage if audit reveals someone is not eligible, but it is unclear ­ Rescission treated as a denial of coverage for purposes of new rules on claims procedures (non-grandfathered plans only) ­ Plan Documents should clearly spell out rules for rescission ­ Plan Document should clearly spell out eligibility rules and coverage exclusions February 2011 © Proskauer

13. 13 Pre-Existing Conditions No preexisting condition exclusions ­ Applies first plan year beginning on or after September 23, 2010 ­ No preexisting condition exclusion permitted for children under age 19 ­ Age limit removed for plan years beginning on or after January 1, 2014 ­ Plans must be updated prior to 2011 plan year and be operated in accordance with law. February 2011 © Proskauer

14. 14 Age 26 Plans that provide dependent child coverage must continue to make such coverage available until the child turns age 26 Generally effective for the 2011 plan year; However, for plan years beginning before January 1, 2014, grandfathered plan can prohibit participation of a child eligible to enroll in other coverage (not including coverage through a parent’s employer or student coverage through college) ­ Must be in plan and SPD ­ Carriers may not want to administer ­ Determine rules for termination ­ Draft Rules Carefully for Definition—What is a Stepchild? ­ Cross reference rescission February 2011 © Proskauer

15. 15 Preventive Care ­ Applies first plan year beginning on or after September 23, 2010 ­ Mandate: Preventive care must be covered without cost-sharing ­ Applies to services with an “A” or “B” rating from the United States Preventive Services Task Force (immunization, screenings and preventative care for infants, children and adolescents, additional care for women) ­ Action item: review current coverage and cost-sharing requirements for preventive care; Update plans accordingly February 2011 © Proskauer

16. 16 ERISA Claims Procedures Enhanced claims procedures ­ Applies first plan year beginning on or after September 23, 2010 Internal claims procedures mandate: ­ ERISA’s claims procedures continue to apply, using a broader definition of the term “adverse benefit determination” ­ Urgent claim response time shortened from 72 hours to “ASAP, but not later than 24 hours” after receipt of claim, unless insufficient information ­ Claimants will be deemed to have exhausted the internal claims and appeals process requirements if plan fails to strictly follow its procedures, with no exceptions for substantial compliance or de minimis errors ­ Plans cannot reduce or terminate ongoing course of treatment without providing advance notice and opportunity for advance review ­ Plans must avoid conflicts of interest with claims adjudicators ­ Adverse benefit determinations related to eligibility are exhausted at the end of the internal claims appeals process February 2011 © Proskauer

17. 17 ERISA Claims Procedures Enhanced claims procedures ­ Technical Release 2010-01 establishes a safe harbor ­ Two possible safe harbors: ­ 1. Voluntary compliance with state external review process ­ i.e., self-funded plan subjects itself to state law requirements ­ 2. Compliance with TR 2010-01 ­ Multi stage review ­ 3 different IRO to circulate between with specified agreements ­ FAQs clarified that facts and circumstances will prevail ­ Also, FAQs clarified limited delay relief February 2011 © Proskauer

18. 18 ERISA Claims Procedures Enhanced claims procedures ­ Applies first plan year beginning on or after September 23, 2010 External claims procedures mandate: ­ Plans will need to comply with either state or federal external review process (transition rules apply for fully insured and self-funded plans) ­ Plans must establish an external review process with consumer protections similar to those in the Uniform External Review Model Act developed by the NAIC, and comply with additional requirements as provided by HHS ­ Process must provide for expedited external review and additional consumer protections with respect to claims involving experimental or investigational treatment ­ Additional guidance on external appeals process forthcoming February 2011 © Proskauer

19. 19 Uniform Explanation of Coverage Uniform explanation of coverage documents / 60-day notice ­ Uniform explanation of coverage must be provided to participants by plans on an annual basis ­ No more than 4 pages; at least 12pt font; “culturally and linguistically appropriate” ­ Form to be developed by HHS in 2012 ­ Advance notice of material modifications if not reflected in the most recent uniform explanation ­ Must be provided 60 days prior to the effective date February 2011 © Proskauer

20. 20 Genetic Information Nondiscrimination Act GINA was signed into law in 2008 ­ Title I addresses genetic information in health insurance, and generally takes effect between May 22, 2009 and May 21, 2010 ­ Title II addresses genetic information in employment contexts, and generally takes effect November 21, 2009 ­ The EEOC issued final regulations implementing Title II of GINA on November 9, 2010, which are effective January 10, 2011. February 2011 © Proskauer

21. 21 Genetic Information Nondiscrimination Act GINA prohibits discrimination by group health plans, health insurance issuers and employers against an individual based on the individual’s genetic information “Genetic information” includes information about an individual’s genetic tests, the genetic tests of family members, and the manifestation of a disease or disorder in a family member February 2011 © Proskauer

22. 22 Genetic Information Nondiscrimination Act Underwriting. Group health plans and insurance carriers generally may not request, require, or purchase genetic information for underwriting purposes, and may not collect genetic information about an individual before the individual is enrolled ­ “Underwriting purposes” means: ­ rules for, or determination of, eligibility (including enrollment and continued eligibility) for benefits under the plan or coverage ­ the computation of premium or contribution amounts ­ the application of any preexisting condition exclusion; and ­ other activities related to the creation, renewal, or replacement of a health insurance contract or health benefits ­ May have impact on Health Risk Assessments February 2011 © Proskauer

23. 23 Genetic Information Nondiscrimination Act Group Health Plan Premiums. Group health plans and insurers are prohibited from setting premium and contribution rates for the employer group on the basis of genetic information of an individual enrolled in the plan ­ Does not prohibit plans and insurers from increasing premiums for the group based on manifestation of a disease or disorder in any individual enrolled in a health plan ­ Manifestation of a disease or disorder in one individual cannot also be used as genetic information about other group members to further increase the premium for the group February 2011 © Proskauer

24. 24 Genetic Information Nondiscrimination Act Genetic Testing. Group health plans may not request or require an individual or a family member of such individual to undergo genetic testing Relationship to HIPAA Regulations. Requires the HIPAA Privacy regulations to be amended to treat genetic information as protected health information, prohibits use of genetic information for underwriting purposes and makes the definitions of genetic information and underwriting consistent with GINA February 2011 © Proskauer

25. 25 Genetic Information Nondiscrimination Act Action Items ­ Review plan operations for all group health plans (including with insurers or third-party administrators) for self-funded plans) to make sure operations are in compliance prior to the effective date ­ Revise HIPAA privacy policies and procedures and notices as necessary to conform with the treatment of genetic information as protected health information and prohibit use and disclosure for underwriting purposes February 2011 © Proskauer

26. 26 Questions? February 2011 Stacy H. Barrow sbarrow@proskauer.com 617.526.9648 February 2011 © Proskauer