Closely-held corporations provided with contraceptive coverage accommodation in final regulations

The Internal Revenue Service, the Employee Benefits Security Administration, and HHS (the Departments) have jointly issued final regulations regarding coverage of certain preventive care services under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Under the ACA, all non-grandfathered insured and self-insured health plans must cover certain preventive services without cost-sharing, including the coverage of contraceptive services. This provision of the ACA has been one of the most hotly contested, resulting in hundreds of lawsuits and a series of related regulations and guidance. The Final rule maintains the existing contraceptive services accommodation for eligible religious nonprofit organizations, but also finalizes an alternative pathway for those organizations to provide notice of their objection to covering contraceptive services. In addition, the final regulations provide certain “closely held” for-profit entities the same accommodations (Final rule, 80 FR 41318, July 14, 2015).

The regulations finalize interim final regulations issued in July 2010 (Interim final rule, 75 FR 41726, July 19, 2010), related to the coverage of preventive services; interim final regulations issued in August 2014 (Final rule, 79 FR 51092, August 27, 2014), related to the process an eligible organization uses to provide notice of its religious objection to the coverage of contraceptive services; and proposed regulations issued in August 2014 (Proposed rules, 79 FR 51118, August 27, 2014), related to the definition of “eligible organization.”

Accommodations

Final regulations issued in July 2013 (Final rule, 78 FR 39870, July 2, 2013) and interim final regulations issued in August 2014 each provide a way for an organization to notify the federal government of their religious objection to providing contraceptive coverage. Organizations are still able to use these two methods: EBSA Form 700 or the alternative process consistent with the Supreme Court’s Wheaton interim order.

The final regulations provide an alternative process, which allows eligible organizations to notify the HHS in writing of its religious objection to covering all or a subset of contraceptive services. This notice must include the name of the eligible organization and the basis on which it qualified for an accommodation; its objection based on sincerely held religious beliefs to covering some or all contraceptive services, as applicable (including an identification of the subset of contraceptive services to which coverage the eligible organization objects, if applicable); the plan name and type (for example, whether it is a student health insurance plan or a church plan); and the name and contact information for any of the plan’s third party administrators and health insurance issuers.

A model notice to HHS that eligible organizations may, but are not required to, use is available at: CMS’ Center for Consumer Information & Insurance Oversight’s website.

HHS and the Department of Labor will then notify insurers and third party administrators of the organization’s objection so that enrollees in plans of such organizations receive separate payments for contraceptive services, with no additional cost to the enrollee or organization, and no involvement by the organization.

Closely held for-profit entities

In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court ruled that the HHS regulations implementing the contraceptive mandate, as applied to closely held corporations, violated the Religious Freedom Restoration Act (RFRA). In response to this decision, the final regulations extend the contraceptive coverage accommodation to closely held for-profit entities.

Relying on a definition used in federal tax law, the Final rule defines a “closely-held for-profit entity” as an entity that is not publicly traded and that has an ownership structure under which more than 50 percent of the organization’s ownership interest is owned by five or fewer individuals, or an entity with a substantially similar ownership structure. For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual. Based on available information, the Departments believe that this definition includes all of the for-profit companies that have challenged the contraceptive coverage requirement on religious grounds.

The rules finalize standards concerning documentation and disclosure of a closely held for-profit entity’s decision not to provide coverage for contraceptive services. The organization’s highest governing body (such as its board of directors, board of trustees, or owners, if managed directly by the owners) must adopt a resolution (or take other similar action consistent with the organization’s applicable rules of governance and with state law) establishing that the organization objects to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs.

These final regulations do not establish any additional requirements to disclose the decision. The Departments believe that the current notice and disclosure standards afford individuals eligible for or enrolled in group health plans (and students eligible for or enrolled in student health insurance) with an accommodation adequate opportunity to know that the employer (or educational institution) has elected the accommodation for its group health plan (or insurance coverage), and that they are entitled to separate payment for contraceptive services from another source without cost sharing.

Office visits

The Final rule also discussed cost sharing for office visits for preventive services provided in conjunction with other services. In this section, the Departments noted that “payment for office visits will remain as indicated in previous guidance” but offered a summary of that payment process. Under the ACA, non-grandfathered health plans and insurers must cover without cost sharing evidence-based items or services that have a rating of “A” or “B” in the current recommendations of the Preventive Services Task Force, immunizations for routine use that have in effect a recommendation from the Advisory Committee on Immunization Practices of the CDA, and preventive and screening services listed in the HRSA guidelines for women of the HRSA guidelines for infants, children, and adolescents.

There has been some confusion about when cost sharing can be imposed for an office visit when the enrollee receives some preventive services during the visit. The Final rule noted that when a preventive service is billed separately from an office visit, the plan or insurer can impose cost-sharing of the office visit, but not for the preventive services. When the preventive service is not billed separately, but the primary purpose of the visit is the delivery of the preventive service, the plan may not impose cost sharing for the visit. Finally, when the preventive service is not billed separately, but the primary purpose for the visit is not providing the preventive service, then the plan may impose cost sharing.