Group Health Plans and Health Insurance Issuers Under the Newborns' and
Mothers' Health Protection Act; Joint Interim Rule [10/27/1998]
Volume 63, Number 207, Page 57545-57564[[Page 57545]]
_______________________________________________________________________
Part V
Department of the Treasury
Internal Revenue Service
26 CFR Part 54
HIPAA Newborns' and Mothers' Health Protection Act: Temporary
Regulations Cross-Reference; Proposed Rule
Department of Labor
Pension and Welfare Benefits Administration
29 CFR Part 2590
Department of Health and Human Services
Health Care Financing Administration
45 CFR Parts 144, 146, and 148
_______________________________________________________________________
Group Health Plans and Health Insurance Issuers Under the Newborns' and
Mothers' Health Protection Act; Joint Interim Rule
[[Page 57546]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 8788]
RIN 1545-AV52
DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2590
RIN 1210-AA63
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
45 CFR Parts 144, 146, and 148
RIN 0938-AI17
Interim Rules for Group Health Plans and Health Insurance Issuers
Under the Newborns' and Mothers' Health Protection Act
AGENCIES: Internal Revenue Service, Department of the Treasury; Pension
and Welfare Benefits Administration, Department of Labor; Health Care
Financing Administration, Department of Health and Human Services.
ACTION: Interim rules with request for comments.
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SUMMARY: This document contains interim rules governing the Newborns'
and Mothers' Health Protection Act of 1996 (NMHPA). The interim rules
provide guidance to employers, group health plans, health insurance
issuers, and participants and beneficiaries relating to new
requirements for hospital lengths of stay in connection with
childbirth. The rules contained in this document implement changes to
the Employee Retirement Income Security Act of 1974 (ERISA) and the
Public Health Service Act (PHS Act) made by NMHPA, and changes to the
Internal Revenue Code of 1986 (Code) enacted as part of the Taxpayer
Relief Act of 1997 (TRA '97). Interested persons are invited to submit
comments on the interim rules for consideration by the Department of
the Treasury, the Department of Labor, and the Department of Health and
Human Services (Departments) in developing final rules.
DATES: Effective Date: The interim rules are effective January 1, 1999.
Applicability Dates: Group market rules. The interim rules for the
group market apply to group health plans and group health insurance
issuers for plan years beginning on or after January 1, 1999.
Individual market rules. The interim rules for the individual
market apply with respect to health insurance coverage offered, sold,
issued, renewed, in effect, or operated in the individual market on or
after January 1, 1999.
Comment Date. Written comments on these interim rules are invited
and must be received by the Departments on or before January 25, 1999.
ADDRESSES: Written comments should be submitted with a signed original
and three copies (except for electronic submissions to the Internal
Revenue Service (IRS)) to any of the addresses specified below. For
convenience, comments may be addressed to any of the Departments,
except that comments relating primarily to the individual market
regulations should be addressed to the Department of Health and Human
Services (HHS). Any comment that is submitted to any Department will be
shared with the other Departments.
Comments to the IRS can be addressed to:
CC:DOM:CORP:R (REG-109708-97), Room 5228, Internal Revenue Service, POB
7604, Ben Franklin Station, Washington, DC 20044
In the alternative, comments may be hand-delivered between the
hours of 8 a.m. and 5 p.m. to:
CC:DOM:CORP:R (REG-109708-97), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW., Washington DC 20224
Alternatively, comments may be transmitted electronically via the
IRS Internet site at:
http://www.irs.ustreas.gov/prod/tax__regs/comments.html
Comments to the Department of Labor can be addressed to:
U.S. Department of Labor, Pension and Welfare Benefits Administration,
200 Constitution Avenue NW., Room N-5669,Washington, DC 20210,
Attention: NMHPA Comments
Alternatively, comments may be hand-delivered between the hours of
9 a.m. and 5 p.m. to the same address.
Comments to HHS can be addressed to:
Health Care Financing Administration, Department of Health and Human
Services, Attention: HCFA-2892-IFC, P.O. Box 26688, Baltimore, MD 21207
In the alternative, comments may be hand-delivered between the
hours of 8:30 a.m. and 5 p.m. to either:
Room 309-G, Hubert Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201
or
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850
All submissions to the IRS will be open to public inspection and
copying in room 1621, 1111 Constitution Avenue, NW., Washington, DC
from 9 a.m. to 4 p.m. All submissions to the Department of Labor will
be open to public inspection and copying in the Public Documents Room,
Pension and Welfare Benefits Administration, U.S. Department of Labor,
Room N-5638, 200 Constitution Avenue, NW., Washington, DC from 8:30
a.m. to 5:30 p.m. All submissions to HHS will be open to public
inspection and copying in room 309-G of the Department of Health and
Human Services, 200 Independence Avenue, SW., Washington, DC from 8:30
a.m. to 5 p.m.
FOR FURTHER INFORMATION CONTACT: Amy Scheingold Turner, Pension and
Welfare Benefits Administration, Department of Labor, at (202) 219-
4377; Suzanne Long, Health Care Financing Administration, Department of
Health and Human Services, at (410) 786-1565; or Russ Weinheimer,
Internal Revenue Service, Department of the Treasury, at (202) 622-
4695.
SUPPLEMENTARY INFORMATION:
Customer Service Information
Individuals interested in obtaining a copy of the Department of
Labor's booklet entitled ``Questions and Answers: Recent Changes in
Health Care Law,'' which includes information on NMHPA, may call the
following toll-free number: 1-800-998-7542. Information on NMHPA and
other recent health care laws is also available on the Department of
Labor website (www.dol.gov/dol/pwba) and the Department of Health and
Human Services' website (www.hcfa.gov).
A. Background
The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA)
(Pub. L. 104-204) was enacted on September 26, 1996 to provide
protections for mothers and their newborn children with regard to
hospital lengths of stay following childbirth.<SUP>1</SUP> In section
602 of NMHPA, Congress declared its findings that:
\1\ NMHPA adds to protections already established under the
Health Insurance Portability and Accountability Act of 1996 (HIPAA)
(Pub. L. 104-191). Among other things, HIPAA provides that a group
health plan and a group health insurance issuer may not impose any
preexisting condition exclusion relating to pregnancy as a
preexisting condition.
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(1) The length of post-delivery hospital stay should be based on
the unique
[[Page 57547]]
characteristics of each mother and her newborn child, taking into
consideration the health of the mother, the health and stability of
the newborn, the ability and confidence of the mother and the father
to care for their newborn, the adequacy of support systems at home,
and the access of the mother and her newborn to appropriate follow-
up health care; and (2) the timing of the discharge of a mother and
her newborn child from the hospital should be made by the attending
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provider in consultation with the mother.
Provisions substantially similar to those in NMHPA were later added to
the Internal Revenue Code of 1986 (Code) by the Taxpayer Relief Act of
1997 (TRA '97) (Pub. L. 105-34), which was enacted on August 5, 1997.
All references hereafter to ``NMHPA'' include the relevant provisions
of TRA '97.
NMHPA was incorporated into the administrative framework
established by Titles I and IV of the Health Insurance Portability and
Accountability Act of 1996 (HIPAA) (Pub. L. 104-191).<SUP>2</SUP> These
titles of HIPAA include substantially similar changes to the Internal
Revenue Code, the Employee Retirement Income Security Act (ERISA), and
the Public Health Service Act (PHS Act) relating to group health plans
and issuers of group health insurance coverage.<SUP>3</SUP> Certain
other provisions in Titles I and IV of HIPAA amended only ERISA or only
the PHS Act. In particular, the PHS Act, as amended by HIPAA, contains
provisions governing health insurance issued to small groups and health
insurance sold in the individual market. The regulations implementing
these provisions added by HIPAA were made available to the public on
April 1, 1997 and published in the Federal Register on April 8, 1997.
The group market regulations were issued jointly by the Secretaries of
the Treasury, Labor, and Health and Human Services (HHS) (62 FR 16894).
The individual market regulations were issued only by HHS (62 FR
16985). See also 62 FR 31669-31670 and 31690-31696 (June 10, 1997)
(containing technical corrections to both the group market and
individual market regulations).
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\2\ NMHPA amended Chapter 100 of Subtitle K of the Code, Part 7
of Subtitle B of Title I of the Employee Retirement Income Security
Act (ERISA), and Title XXVII of the Public Health Service Act (PHS
Act).
\3\ The terms group health plan and health insurance issuer are
defined in Code section 9832(a) and (b)(2), ERISA section 733(a) and
(b)(2), and PHS Act section 2791(a) and (b)(2). The term group
health insurance coverage is defined in ERISA section 733(b)(4) and
PHS Act section 2791(b)(4). Generally, any health insurance coverage
that does not meet the definition of group health insurance coverage
is individual coverage even if State law treats the coverage as
group coverage for other purposes. The terms individual health
insurance coverage and individual market are defined in PHS Act
section 2791(b)(5) and (e)(1).
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NMHPA applies to health coverage in the large and small group markets,
and in the individual market. The Secretaries of the Treasury, Labor,
and HHS share jurisdiction over the NMHPA provisions. These provisions
are substantially similar, except as follows:
<bullet> The NMHPA provisions in the Code generally apply to all
group health plans (including church plans) other than governmental
plans, but they do not apply to health insurance issuers. The NMHPA
provisions in the Code do not contain the requirement that a plan
provide the special notice that is required under the NMHPA provisions
in ERISA and the PHS Act. An employer or plan that fails to comply with
the NMHPA provisions in the Code may be subject to an excise tax under
section 4980D of the Code.
<bullet> The NMHPA provisions in ERISA generally apply to all group
health plans other than governmental plans and church plans. These
provisions also apply to health insurance issuers that offer health
insurance in connection with such group health plans. Generally, the
Secretary of Labor enforces the provisions of NMHPA in ERISA, except
that no enforcement action may be taken by the Secretary against
issuers. However, individuals may generally pursue actions against
issuers under ERISA and, in some circumstances, under State law.
<bullet> The NMHPA provisions in the PHS Act generally apply to
health insurance issuers and to certain State and local governmental
plans. States, in the first instance, enforce the PHS Act with respect
to issuers. Only if a State does not substantially enforce any
provisions under its insurance laws will HHS enforce the provisions,
through the imposition of civil money penalties. HHS has primary
enforcement authority with respect to State and local governmental
plans.
The interim rules being issued today by the Secretaries of the
Treasury, Labor, and HHS have been developed on a coordinated basis by
the Departments. In addition, these interim rules take into account
comments received by the Departments in response to the request for
public comments on NMHPA published in the Federal Register on June 26,
1997 (62 FR 34604). Except to the extent needed to reflect the
statutory differences described above, the interim rules of each
Department are substantively identical. However, there are certain
nonsubstantive differences, including certain stylistic differences in
language and structure to conform to conventions used by a particular
Department. These differences have been minimized and any differences
in wording (other than those reflecting differences in the NMHPA
statutory provisions described above) are not intended to create any
substantive difference. Finally, the individual market regulations are
issued solely by HHS.
B. Overview of NMHPA and the Interim Rules
The General Rule for Hospital Lengths of Stay
NMHPA and the interim rules provide a general rule under which a
group health plan and a health insurance issuer may not restrict
mothers' and newborns' benefits for a hospital length of stay in
connection with childbirth to less than 48 hours following a vaginal
delivery or 96 hours following a delivery by cesarean
section.<SUP>4</SUP> The general rule requires plans and issuers
providing benefits for hospital lengths of stay in connection with
childbirth to cover the minimum length of stay for all deliveries. The
interim rules provide that the determination of whether an admission is
in connection with childbirth is a medical decision to be made by the
attending provider. An example clarifies that delivery does not have to
occur inside a hospital in order for an admission to be ``in connection
with childbirth.'' NMHPA and the interim rules permit an exception to
the 48-hour (or 96-hour) general rule if the attending provider
decides, in consultation with the mother, to discharge the mother or
her newborn earlier.
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\4\ The interim rules use the term ``vaginal delivery'' to
clarify that all vaginal deliveries, whether with complications or
without complications, are subject to the 48-hour length-of-stay
requirement.
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Many commenters asked whether the length of stay should be
calculated from the time of delivery. Under the interim rules, when
delivery occurs in the hospital, the stay begins at the time of
delivery (or in the case of multiple births, at the time of the last
delivery). When delivery occurs outside the hospital, the stay begins
at the time the mother or newborn is admitted.
An attending provider is an individual who is licensed under
applicable State law to provide maternity or pediatric care and who is
directly responsible for providing such care to a mother or newborn
child. Therefore, a plan, hospital, managed care organization, or other
issuer is not an attending provider. However, a nurse midwife or a
physician assistant may be
[[Page 57548]]
an attending provider if licensed in the State to provide maternity or
pediatric care in connection with childbirth.
Prohibitions
As noted above, an exception to the 48-hour (or 96-hour) general
rule applies if the attending provider decides, in consultation with
the mother, to discharge the mother or newborn earlier. NMHPA and the
interim rules prohibit certain practices to ensure that this exception
will not result in early discharges that could adversely affect the
health or well-being of the mother or newborn.
Specifically, with respect to mothers, NMHPA provides that a group
health plan or health insurance issuer may not deny a mother or her
newborn child eligibility or continued eligibility to enroll or renew
coverage under the terms of the plan or policy solely to avoid the
NMHPA requirements, or provide monetary payments or rebates to a mother
to encourage her to accept less than the minimum protections available
under NMHPA. The interim rules clarify that such prohibited payments
include payments-in-kind. However, an example in the interim rules
clarifies that a plan or issuer does not violate this prohibition by
providing after-discharge, follow-up services to a mother and newborn
discharged early if those services are not more than what the mother
and newborn would have received if they had stayed in the hospital the
full 48 hours (or 96 hours).
In addition, with respect to benefit restrictions, NMHPA and the
interim rules provide that a plan or issuer may not restrict the
benefits for any portion of a 48-hour (or 96-hour) hospital length of
stay in a manner that is less favorable than the benefits provided for
any preceding portion of the stay. This prohibition includes certain
types of precertification requirements, discussed below in the
Authorization and precertification section.
Finally, with respect to attending providers, NMHPA provides that a
plan or issuer may not penalize, or otherwise reduce or limit the
reimbursement of, an attending provider because the provider furnished
care to a mother or newborn in accordance with NMHPA, or provide
monetary or other incentives to an attending provider to induce the
provider to furnish care to a mother or newborn in a manner
inconsistent with NMHPA. The interim rules clarify this prohibition in
four ways. First, the prohibition applies to both direct and indirect
incentives to attending providers. Second, penalties against an
attending provider include taking disciplinary action against or
retaliating against the attending provider. Third, the term
``compensation'' is used in the interim rules rather than the term
``reimbursement'' to clarify that all forms of remuneration to
attending providers are included in the prohibition, and to avoid any
confusion that otherwise could result from the fact that the term
``reimbursement'' has a narrower meaning in some insurance contexts.
Fourth, the statutory phrase ``to induce'' is interpreted to include
providing any incentive that could induce an attending provider to
furnish care inconsistent with NMHPA and the interim rules (whether or
not a specific attending provider is actually induced to furnish care
inconsistent with NMHPA and the interim rules).
Construction
NMHPA and the interim rules apply only to group health plans and
health insurance issuers that provide benefits for a hospital stay in
connection with childbirth. NMHPA and the interim rules do not require
plans and issuers to provide these benefits.<SUP>5</SUP> In addition,
NMHPA and the interim rules do not prevent plans or issuers from
imposing deductibles, coinsurance, or other cost-sharing measures for
health benefits relating to hospital stays in connection with
childbirth as long as the cost-sharing for any portion of a hospital
stay subject to the general rule is not less favorable to mothers and
newborns than that imposed on any preceding portion of the stay. Thus,
for example, with respect to a 48-hour hospital stay, the coinsurance
for the second 24 hours cannot be greater than that for the first 24
hours.
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\5\ While NMHPA and the interim rules do not require plans and
issuers to provide coverage for hospital stays in connection with
childbirth, other legal requirements may apply, including Title VII
of the Civil Rights Act of 1964 (Title VII). Title VII prohibits
discrimination on the basis of sex, including because of pregnancy,
childbirth, or related medical conditions. 42 U.S.C. 2000e-(k). The
Equal Employment Opportunity Commission (EEOC) has commented, by
letter dated July 28, 1997, that, ``[u]nder Title VII, women
affected by pregnancy, childbirth, or related medical conditions
must be treated the same as individuals affected by other medical
conditions. This applies to all aspects of employment, including
employer-provided health insurance benefits. * * * Thus, Title VII
prohibits a plan from excluding hospital stay benefits in connection
with childbirth if the plan provides hospital stay benefits in
connection with other medical conditions.'' EEOC is the federal
agency responsible for enforcing Title VII and other federal equal
employment opportunity laws. Questions regarding Title VII should be
directed to the EEOC.
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With respect to health insurance coverage offered in the individual
market, NMHPA and the interim rules apply to all health insurance
coverage, and are not limited in their application to coverage that is
provided to eligible individuals, as defined in section 2741(b) of the
PHS Act.
Authorization and Precertification
NMHPA and the interim rules contain three provisions that affect
authorization and precertification for hospital lengths of stay in
connection with childbirth.
<bullet> Under paragraph (a) of the interim rules (relating to
hospital length of stay), a group health plan or a health insurance
issuer may not require a physician or other health care provider to
obtain authorization from the plan or issuer to prescribe a hospital
length of stay that is subject to the general rule.
<bullet> Under paragraph (b) of the interim rules (relating to
prohibitions), a plan or issuer may not restrict benefits for part of a
stay subject to the general rule in a way that is less favorable than a
prior portion of the stay. Under an example in the interim rules, a
plan or issuer is precluded from requiring a covered individual to
obtain precertification for any portion of a hospital stay that is
subject to the general rule if precertification is not required for any
preceding portion of the stay. However, the interim rules do not
prevent a plan or issuer from requiring precertification for any
portion of a stay after 48 hours (or 96 hours), or from requiring
precertification for an entire stay.
<bullet> In addition, under paragraph (c) of the interim rules
(containing rules of construction), a plan or issuer may not increase
an individual's coinsurance for any later portion of a 48-hour (or 96-
hour) hospital stay. An example illustrates that plans and issuers may
vary cost-sharing in certain circumstances, provided the cost-sharing
rate is consistent throughout the 48-hour (or 96-hour) hospital length
of stay.
Compensation of Attending Provider
NMHPA and the interim rules do not prevent a group health plan or a
health insurance issuer from negotiating with an attending provider the
level and type of compensation for care furnished in accordance with
the interim rules (including the prohibitions section).
Applicability in Certain States
There is an exception to the NMHPA requirements for health
insurance coverage in certain States.<SUP>6</SUP> Specifically,
[[Page 57549]]
NMHPA and the interim rules do not apply with respect to health
insurance coverage if there is a State law <SUP>7</SUP> that meets any
of the following criteria:
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\6\ The term State includes the 50 States, the District of
Columbia, Puerto Rico, the Virgin Islands, American Samoa, Guam,
Wake Island, the Northern Mariana Islands, and the Canal Zone (i.e.,
the areas and installations in the Republic of Panama made available
to the United States pursuant to the Panama Canal Treaty of 1977 and
related agreements, until December 31, 1999.)
\7\ Generally, under Part 7 of ERISA and Title XXVII of the PHS
Act, a State law that ``prevents the application of `` those
provisions is preempted by section 731(a)(1) of ERISA and sections
2723(a)(1) and 2762(a)(1) of the PHS Act. However, NMHPA specifies
that State laws that meet the statutory criteria will apply even
though they might otherwise ``prevent the application of'' the NMHPA
requirements. See section 711(f) of ERISA and sections 2704(f) and
2751(c) of the PHS Act.
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<bullet> The State law requires health insurance coverage to
provide at least a 48-hour (or 96-hour) hospital length of stay in
connection with childbirth,
<bullet> The State law requires health insurance coverage to
provide for maternity and pediatric care in accordance with guidelines
established by the American College of Obstetricians and Gynecologists,
the American Academy of Pediatrics, or any other established
professional medical association, or
<bullet> The State law requires that decisions regarding the
appropriate hospital length of stay in connection with childbirth be
left entirely to the attending provider in consultation with the
mother. The interim rules clarify that State laws that require the
mother to consent to the decision made by the attending provider
satisfy this criterion.
Although this NMHPA exception applies with respect to insured group
health plans, it does not apply with respect to a group health plan to
the extent the plan provides benefits for hospital lengths of stay in
connection with childbirth other than through health insurance
coverage.<SUP>8</SUP>
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\8\ In conducting an economic analysis of the interim rules, the
Departments of Labor and HHS conducted a preliminary review of State
laws to determine the applicability of NMHPA's requirements in each
State. This discussion, in section D of this preamble, includes a
list of the States in which the Departments of Labor and HHS
assumed, solely for the purpose of the economic analysis, that
NMHPA's requirements apply.
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Notice Requirements Under ERISA and the PHS Act
ERISA background. ERISA generally requires that participants in,
and beneficiaries receiving benefits under, a group health plan be
furnished a summary plan description (SPD) to apprise them of their
rights and obligations under the plan. ERISA and its implementing
regulations prescribe what is to be included in the SPD, and the manner
in which participants and beneficiaries are to be notified of any
``material modification'' to the terms of the plan or any change in the
information required to be included in the SPD. A summary description
of a material modification is generally required to be furnished not
later than 210 days after the end of the plan year in which the change
is adopted. A summary of any material reduction in covered services or
benefits is generally required to be furnished not later than 60 days
after adoption of the change.
NMHPA changes to ERISA and the PHS Act. The NMHPA amendments to
ERISA added section 711(d), which requires that the imposition of the
NMHPA requirements is to be treated as a material modification to the
plan, except that the summary description of the modification must be
provided by not later than 60 days after the first day of the first
plan year in which the requirements apply. NMHPA also amended both the
group and individual market provisions of title XXVII of the PHS Act to
apply the ERISA notice requirement to certain entities not otherwise
subject to ERISA.
The Department of Labor published interim regulations implementing
section 711(d) of ERISA on April 8, 1997 (62 FR 16979), issued
separately from the HIPAA regulations published on the same date.
Section 2704(d) of the PHS Act requires nonfederal governmental
plans to comply with the notice requirement contained in section 711(d)
of ERISA as if that section applied to the plan. Similarly, section
2751(b) of the PHS Act requires a health insurance issuer in the
individual market to comply with the notice requirement in section
711(d) of ERISA as if that section applied to the issuer and as if the
issuer were a group health plan.
The NMHPA interim rules published today include the notice
provisions applicable under the PHS Act. They are based on the
requirements contained in the Department of Labor's original notice
regulations, but have been adapted for two reasons. First, changes were
made to accommodate the Departments' interpretations of NMHPA's
substantive requirements as contained in these interim rules. A
revision of the notice provisions applicable to plans subject to ERISA
recently was published in the Federal Register in order to accommodate
these interpretations. 63 FR 48372 (September 9, 1998). Second, the
statute provides that covered individuals in both the individual and
group markets (in group health plans subject to either ERISA or the PHS
Act) be notified of their rights under NMHPA. While there are
fundamental differences in the types of entities regulated under ERISA
as compared to the PHS Act, and in the structure of the two Acts, the
Departments are coordinating their work on these two regulations to
ensure that affected individuals will receive the same disclosure of
rights, adapted as appropriate to take into account the different
contexts.
Substance of the PHS Act notice requirements--In the group market.
Section 2704 of the PHS Act applies the NMHPA requirements to group
health plans that are subject to the group market provisions of Part A
of Title XXVII of the PHS Act. The only group health plans that are
subject to the PHS Act are nonfederal governmental plans, which are not
directly subject to any ERISA requirements. In addition, these plans
may elect to be exempt from most of the requirements of Title XXVII,
including the NMHPA requirements, with respect to self-insured
benefits. Section 2704(d) states that a group health plan subject to
the PHS Act ``shall comply with the notice requirement under section
711(d) of [ERISA] with respect to the requirements of this section as
if such section applied to such plan.''
These interim rules interpret section 2704(d) of the PHS Act to
require that nonfederal governmental plans that provide benefits for
hospital lengths of stay in connection with childbirth, and that are
subject to the NMHPA requirements, provide participants and
beneficiaries with a statement describing those requirements. The
statement must be included in the plan document that provides a
description of plan benefits to participants and beneficiaries and must
be furnished to participants and beneficiaries not later than 60 days
after the first day of the first plan year beginning on or after the
effective date of these interim rules.<SUP>9</SUP> The interim rules
set forth the language that must be used by plan administrators to
satisfy the notice requirement for group health plans subject to the
PHS Act.
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\9\ Although the specific requirements of these interim rules
therefore apply for plan years beginning on or after January 1,
1999, the underlying statutory requirement went into effect for plan
years beginning on or after January 1, 1998, the effective date of
NMHPA.
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In the individual market. Section 2751(a) of the PHS Act applies
the NMHPA requirements to health insurance issuers in the individual
market. Section 2751(b) states that a health insurance issuer subject
to the individual market provisions of the PHS Act ``shall comply with
the notice requirement under section 711(d) of [ERISA] with respect to
[the NMHPA requirements] as if such section applied to such issuer and
such issuer were a group health plan.'' Issuers in the individual
market are not subject to any
[[Page 57550]]
federal requirements comparable to disclosure of a ``summary plan
description'' under ERISA, although they may be subject to similar
State law requirements. In addition, the concept of a ``plan year''
does not apply in the individual market, and the effective date of the
NMHPA requirements is not tied to a plan year. Accordingly, the
requirements of these interim rules apply to health insurance coverage
``offered, sold, issued, renewed, in effect, or operated'' in the
individual market on or after the effective date of these interim
rules.<SUP>10</SUP>
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\10\ Although the specific requirements of these interim rules
therefore apply on or after January 1, 1999, the underlying
statutory requirement went into effect January 1, 1998, the
effective date of NMHPA.
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These interim rules interpret section 2751(b) of the PHS Act to
require that issuers of individual health insurance coverage that
includes benefits for hospital lengths of stay in connection with
childbirth must include a statement in the insurance contract
describing the NMHPA requirements, and, not later than 60 days after
the effective date of the interim rules, provide covered individuals
with a rider or equivalent document that gives notice of the NMHPA
requirements. The interim rules set forth the language that must be
used in an insurance contract (or rider) to satisfy the notice
requirement added by NMHPA.
Effective Dates
Group market. NMHPA applies to group health plans and group health
insurance issuers for plan years beginning on or after January 1, 1998.
The interim rules for the group market apply to group health plans and
group health insurance issuers for plan years beginning on or after
January 1, 1999.
Individual market. NMHPA applies to health insurance coverage
offered, sold, issued, renewed, in effect, or operated in the
individual market on or after January 1, 1998. The interim rules for
the individual market apply to health insurance coverage offered, sold,
issued, renewed, in effect, or operated in the individual market on or
after January 1, 1999.
C. Interim Rules and Request for Comments
Section 9833 of the Code (formerly section 9806), section 734 of
ERISA (formerly section 707), and section 2792 of the PHS Act authorize
the Secretaries of the Treasury, Labor, and HHS to promulgate any
interim final rules that they determine are appropriate to carry out
the provisions of Chapter 100 of Subtitle K of the Code, Part 7 of
Subtitle B of Title I of ERISA, and Title XXVII of the PHS Act, which
include the NMHPA provisions. The Departments have determined that
interim final rules are appropriate because there is a need to define
the substance of the federal requirements and the scope of their
applicability in anticipation of the 1999 plan year.
Many commenters have asked the Departments to clarify certain NMHPA
provisions. For example, the Departments have been asked when the 48-
hour (or 96-hour) stay begins, and whether the requirements apply only
after birth in a hospital. In addition, NMHPA does not apply to health
insurance coverage if there is a State law that meets certain criteria
outlined in the NMHPA exception. Currently, there are many States that
have such laws meeting the NMHPA exception. Commenters have asked the
Departments to clarify the applicability of federal law in these States
as well as in other States that do not have a law meeting NMHPA's
criteria.
On June 26, 1997 the Departments of Labor and HHS issued a Request
for Information (RFI) inviting comments on the NMHPA provisions. After
consideration of the many comments received in response to the
Departments' RFI and in light of the outstanding questions relating to
the substance and applicability of NMHPA, the Departments have
determined that it is appropriate to issue interim final rules at this
time to ensure that group health plans and health insurance issuers
have timely guidance before they prepare their open season materials in
anticipation of the 1999 plan year. (More than one half of plans begin
their fiscal years on January 1.) Written comments on these interim
rules are invited.
D. Executive Order 12866, Effect of the Statute, and Paperwork
Reduction Act--The Departments of Labor and HHS
Executive Order 12866
Executive Order 12866 requires agencies to assess all costs and
benefits of available regulatory alternatives, and when regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects; distributive impacts; and equity). Section 3(f) of Executive
Order 12866 requires agencies to prepare a regulatory impact analysis
for any rule that is deemed a ``significant regulatory action''
according to specified criteria. This includes whether the rule may
have an annual effect on the economy of $100 million or more or certain
other specified effects, or whether the rule raises novel legal or
policy issues arising out of the President's priorities.
The Office of Management and Budget (OMB) has determined this to be
a major rule, as well as an economically significant regulatory action
under Section 3(f) of Executive Order 12866. The estimated impact of
NMHPA on insured costs is in the range of $130 million to $200 million.
The following analysis was conducted by the Departments of Labor and
Health and Human Services.
The interim rules, for the most part, mirror the statutory
provisions, which are largely self-executing. While the interim rules
make interpretations or clarifications to some of the statutory
provisions, none of these has a significant economic impact. The effect
of the statute is addressed below.
Effect of the Statute
NMHPA was passed in response to a finding by the Congress that
group health plans and health insurance issuers tend to limit benefits
for hospital lengths of stay in connection with childbirth. The main
intent of the law was to ensure that adequate care is provided to
mothers and their newborns during the first few critical days following
birth. The Congress was concerned that the decision to discharge the
mother and newborn was being driven by the financial motivations of
plans and issuers, rather than the medical interests of the patient.
NMHPA was modeled after guidelines developed by the American
College of Obstetricians and Gynecologists (ACOG) and the American
Academy of Pediatrics (AAP). NMHPA allows the attending provider, in
consultation with the mother, to make hospital length of stay
decisions, rather than the plan or issuer. Although mothers and their
newborns are not obligated to stay in the hospital for any period of
time following delivery, plans and issuers must now cover at least 48
hours following a vaginal delivery and at least 96 hours following a
delivery by cesarean section unless the attending provider, in
consultation with the mother, decides to discharge earlier.
Many believe that the minimum length of stay requirements of 48
hours for a vaginal delivery and 96 hours for a cesarean section will
have a positive impact on the overall health and well-being of mothers
and newborns. The longer stays will allow health care providers
sufficient time to screen for metabolic and genetic disorders in
newborns. It will also permit time to provide parental education to
mothers
[[Page 57551]]
and to assess their ability to care for their newborn.
Although some services performed in an inpatient hospital setting
may be effectively provided in other settings, such as clinics or
physicians' offices, not all women have had access to the full range of
appropriate follow-up care. NMHPA ensures that many women and newborns
with health coverage will now be provided an acceptable level of
postpartum care.
Many States <SUP>11</SUP> have enacted laws that prescribe benefits
for hospital lengths of stay in connection with childbirth. NMHPA
provides that the federal NMHPA requirements do not apply with respect
to health insurance coverage <SUP>12</SUP> if there is a State law that
satisfies one or more of the following criteria: (1) requires such
coverage to provide for at least a 48-hour hospital length of stay
following a vaginal delivery and at least a 96-hour length of stay
following a delivery by cesarean section, (2) requires such coverage to
provide for maternity and pediatric care in accordance with guidelines
established by the American College of Obstetricians and Gynecologists,
the American Academy of Pediatrics, or other established professional
medical associations, or (3) requires, in connection with such coverage
for maternity care, that the hospital length of stay for such care is
left to the decision of (or is required to be made by) the attending
provider in consultation with the mother.
---------------------------------------------------------------------------
\11\ For purposes of Part 7 of ERISA and Title XXVII of the PHS
Act (including the NMHPA provisions), the term State includes the 50
States, the District of Columbia, Puerto Rico, the Virgin Islands,
American Samoa, Guam, Wake Island, the Northern Mariana Islands, and
the Canal Zone (i.e., the areas and installations in the Republic of
Panama made available to the United States pursuant to the Panama
Canal Treaty of 1977 and related agreements, until December 31,
1999.)
\12\ The term health insurance coverage means ``benefits
consisting of medical care (provided directly, through insurance or
reimbursement, or otherwise and including any items and services
paid for as medical care) under any hospital or medical service
policy or certificate, hospital or medical service plan contract, or
health maintenance organization contract offered by a health
insurance issuer.'' ERISA section 733(b)(1) and PHS Act section
2791(b)(1). The term health insurance issuer means ``an insurance
company, insurance service, or insurance organization * * * which is
licensed to engage in the business of insurance in a State and which
is subject to State law which regulates insurance.* * * Such term
does not include a group health plan.'' ERISA section 733(b)(2) and
PHS Act section 2791(b)(2).
---------------------------------------------------------------------------
Accordingly, the federal NMHPA requirements do not apply to insured
plans (and partially-insured plans, to the extent benefits for hospital
lengths of stay in connection with childbirth are provided through
insurance coverage) in States in which a State law meets one or more of
the above criteria. Moreover, the federal NMHPA requirements do not
apply to issuers (both in the group market and the individual market)
in States in which State law meets one or more of the above criteria.
However, the federal NMHPA requirements apply to self-insured plans
(and partially-insured plans, to the extent benefits for hospital
lengths of stay in connection with childbirth are provided other than
through insurance coverage), regardless of State law.
According to a chart developed by the National Association of
Insurance Commissioners for a hearing in September 1997 before the
House Committee on Ways and Means, Subcommittee on Health, many States
already had provisions in their laws or regulations prescribing
benefits for hospital lengths of stay in connection with childbirth
before the enactment of NMHPA. Subsequently, for purposes of this
discussion of the Effect of the Statute, the Departments performed a
preliminary review of State laws as of July 1, 1998.<SUP>13</SUP> As a
result of this review, it is estimated that 40 States have laws that
appear to meet the criteria specified in NMHPA. These States are as
follows: Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut, the District of Columbia, Florida, Georgia, Illinois,
Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland,
Massachusetts, Minnesota, Missouri, Montana, Nevada, New Hampshire, New
Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota,
Tennessee, Texas, Virginia, Washington, and West Virginia.
---------------------------------------------------------------------------
\13\ In conducting the review, the Departments considered State
statutes, regulations, rules, bulletins, and case law. However, the
review did not take into account other State actions that should be
considered when making a legal determination regarding whether a
State law meets the criteria specified in NMHPA.
---------------------------------------------------------------------------
Accordingly, in these 40 States, only church plans, self-insured
private-sector employer-sponsored group health plans,<SUP>14</SUP> and
self-insured nonfederal governmental plans <SUP>15</SUP> will be
affected by NMHPA. Based on data from the March 1996 Current Population
Survey and other sources, Price Waterhouse has estimated that there are
approximately 270,000 self-insured ERISA plans covering 53 million
individuals. In addition, based on data from the March 1996 Current
Population Survey and other sources, Price Waterhouse estimated that
there are approximately 30,000 self-insured nonfederal governmental
plans covering 18 million individuals.<SUP>16</SUP>
---------------------------------------------------------------------------
\14\ Hereafter, other private-sector employer-sponsored group
health plans are referred to as ERISA plans.
\15\ The term nonfederal governmental plan means a governmental
plan that is not a federal governmental plan. PHS Act section
2791(d)(8)(C). The term governmental plan generally means a plan
established or maintained for its employees by the government of the
United States, by the government of any State or political
subdivision thereof, or by any agency or instrumentality of any of
the foregoing. PHS Act section 2791(d)(8)(A). The term federal
governmental plan means a governmental plan established or
maintained for its employees by the government of the United States
or by any agency or instrumentality of such government. PHS Act
section 2791(d)(8)(B).
\16\ Sponsors of self-insured nonfederal governmental plans can
elect to have their plans exempted from most of the requirements of
Title XXVII of the PHS Act, including the NMHPA requirements, with
respect to self-insured benefits. To date, fewer than 600 sponsors
have elected to have their plans exempted in whole or in part, and
at least some of these plans have chosen to be exempt from NMHPA.
This means the number of self-insured nonfederal governmental plans
affected by NMHPA will be less than the 30,000 plans cited above.
---------------------------------------------------------------------------
NMHPA will also affect insured ERISA plans, insured church plans,
insured nonfederal governmental plans, and issuers in the individual
market in States that do not have a law meeting one or more of the
criteria specified in NMHPA. For purposes of this review of the Effect
of the Statute, the Departments performed a preliminary review of State
laws as of July 1, 1998. As a result of this review, it is estimated
that the federal NMHPA requirements will apply to health insurance
coverage in 18 States.<SUP>17</SUP> These States are as follows:
Delaware, Hawaii, Idaho, Michigan, Mississippi, Nebraska, Oregon, Utah,
Vermont, Wisconsin, Wyoming, Puerto Rico, the Virgin Islands, American
Samoa, Guam, Wake Island, the Northern Mariana Islands, and the Canal
Zone (i.e., the areas and installations in the Republic of Panama made
available to the United States pursuant to the Panama Canal Treaty of
1977 and related agreements, until December 31, 1999).
---------------------------------------------------------------------------
\17\ The federal NMHPA provisions appear to apply in these 18
States because either the State has not enacted any law that meets
the NMHPA criteria or the State has incorporated the federal NMHPA
requirements by reference.
---------------------------------------------------------------------------
Based on data from the March 1996 Current Population Survey and
other sources, Price Waterhouse estimated that there are approximately
2.5 million insured ERISA plans, 145,000 insured nonfederal
governmental plans, and 1,000 issuers in the individual market. For a
variety of reasons, these totals cannot be broken down by State. These
reasons include a lack of detailed data at the State level and
inconsistencies in how data are reported, both within and across
States. In addition, the
[[Page 57552]]
complexities and volatility of today's health care environment, the
segmentation of the health care markets, and the rapid increase in
various forms of managed care arrangements make it difficult to define
and track such plans.<SUP>18</SUP>
---------------------------------------------------------------------------
\18\ See, for example, Chollet, D.J., Kirk, A.M. and Ermann,
R.D. (1997). Mapping Insurance Markets: The Group and Individual
Insurance Markets in 26 States. Washington: The Alpha Center.
---------------------------------------------------------------------------
The Congressional Budget Office (CBO) did not estimate costs for
implementing NMHPA, passed by the Congress in September 1996. However,
CBO estimated the costs for implementing S.969, the Senate version of
NMHPA. While there are several differences between S.969 and the final
joint legislation,<SUP>19</SUP> the CBO estimates for implementing S.
969 are the only relevant cost data available, and can be used as a
baseline estimate for the cost impact of NMHPA.
---------------------------------------------------------------------------
\19\ S. 969 contained provisions for post-delivery follow-up
care, or home health visits. In addition, the costs provided by CBO
assumed an implementation date of January 1, 1997, rather than
January 1, 1998.
---------------------------------------------------------------------------
After making adjustments to reflect the effects of State laws in
effect at the time of their estimates, CBO concluded that about 900,000
insured births a year have shorter hospital lengths of stay than the
minimum lengths of stay provided under NMHPA. CBO assumed that some of
these births would result in an additional inpatient day, and some
would receive a follow-up visit. Some mothers would still choose to go
home before the full time allowed by NMHPA, while others are already
receiving a timely follow-up visit and therefore would not incur any
additional costs. CBO estimated that inpatient hospital days would
increase by approximately 400,000 days and follow-up care would
increase by approximately 200,000 visits annually.
CBO estimated that the additional utilization due to the
implementation of S. 969 would have resulted in an aggregate increase
in insured costs of 0.06 percent for all employment-based and
individually purchased health plans. CBO assumed that, in response to
the increase in premiums, employers and individuals may choose to
reduce coverage or drop benefits. Although some plans may make slight
reductions in overall benefits to offset this minimal increase in cost,
the Departments believe that virtually no employers will drop health
coverage entirely or drop coverage for hospital stays in connection
with childbirth. After taking behavioral responses into account, CBO
estimated that employer contributions for health insurance would only
rise by about 0.02 percent and most of that increase likely would be
passed back to employees in the form of reduced wages.
Applying the same 0.06 percent increase to the cost of health
insurance for covered employees of nonfederal governmental plans would
raise expenditures. However, CBO assumed that most of these costs would
be passed back to employees.
Apart from increased benefit costs for their employees, States may
face additional costs for enforcing NMHPA's requirements on issuers of
health insurance in the group and individual markets. Because States
currently regulate the private-sector health insurance market, CBO
assumed that the increase in costs would be marginal. However, in cases
where States fail to implement NMHPA or their own laws meeting the
criteria specified in NMHPA, the federal government assumes enforcement
authority. Depending on the need for federal enforcement, some of the
aforementioned costs may be shifted to the federal government.
Although the CBO estimates for implementing S. 969 can be used as a
baseline for determining the cost impact of NMHPA, they must be updated
to reflect the enactment in several additional States of laws or
regulations meeting the criteria specified in NMHPA and for the
elimination of post-delivery follow up care. Adjusting the CBO
estimates for 28 States that had laws that met the criteria specified
in NMHPA at the time of NMHPA's enactment, reduces the number of people
directly affected by NMHPA. Approximately 60 percent of people covered
by insured ERISA plans and therefore subject to State laws, are in the
28 States that had enacted laws prior to NMHPA.
With fewer people affected, the assumed increase in utilization is
also lower, which should translate into a smaller increase in aggregate
health care costs. However, as discussed previously, S. 969 had a
provision for follow-up visits in place of an additional inpatient day.
CBO assumed that about one-third of the additional utilization would be
follow-up visits, and that the cost of a follow-up visit is only about
one-fourth the cost of a post-delivery hospital day.
Based on those assumptions, if all of those who would have chosen a
follow-up visit under S. 969 elected to remain in the hospital for an
additional day, the estimated aggregate increase in insured costs would
be 0.07 percent, slightly higher than the CBO estimate. If, however,
mothers and physicians determine that some of the follow-up care is
unnecessary, and that less than the minimum hospital length of stay is
necessary, some of the additional costs will not be incurred. If none
of the follow-up visits were converted to additional inpatient days,
the estimated aggregate increase in insured costs would be 0.04
percent. Therefore, the impact of NMHPA on insured costs is in the 0.04
to 0.07 percent range, or $130 million to $200 million (1996 dollars).
It should be noted that since the enactment of NMHPA, twelve
additional States have enacted laws or regulations meeting the criteria
specified in NMHPA. These laws apply to an additional 25 percent of
those in fully insured health insurance plans. While some of these
States passed legislation in direct response to the federal law, other
States had already considered hospital lengths of stay for childbirth,
but without final passage of legislation. Thus, the estimates of the
statutory impacts, as of the date of enactment, probably overstate the
direct impact of NMHPA.
Paperwork Reduction Act
The interim rules contain no new information collection
requirements that are subject to review and approval by OMB under the
Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35).
The agencies reported the information collection burdens associated
with NMHPA in the interim rules (Interim Rules Amending ERISA
Disclosure Requirements for Group Health Plans) implementing section
711(d) of ERISA that were published in the Federal Register on April 8,
1997 (62 FR 16979). OMB approved these information collection
requirements under OMB control number 1210-0039. Subsequently, the
agencies published the OMB control number in the Federal Register at 62
FR 36205 (July 7, 1997).
In addition, the group and individual market notification
requirements for group health plans under section 2704(d), and issuers
under 2751(b) of the PHS Act, are not considered ``information'' as
defined in 5 CFR 1320.3(c)(2) and are therefore not subject to the
Paperwork Reduction Act of 1995. In particular, 5 CFR 1320.3(c)(2)
states that ``the public disclosure of information originally supplied
by the federal government to the recipient for the purpose of
disclosure to the public is not included within the definition'' of a
collection of information.
[[Page 57553]]
E. Regulatory Flexibility Act, Unfunded Mandates Reform Act of 1995,
and Small Business Regulatory Enforcement Fairness Act of 1995
Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq) requires
that, whenever an agency is required to publish a general notice of
proposed rulemaking, the agency shall prepare and make available for
public comment an initial regulatory flexibility analysis. The analysis
describes the impact of the rule on small entities and identifies any
significant alternatives to the rule which accomplish the stated
objectives of the applicable law and which would minimize the impact on
small entities. For purposes of the RFA, States and individuals are not
considered small entities. Small employers and small group health plans
are considered small entities.
Since these rules are being issued as interim final rules and not
as a Notice of Proposed Rulemaking (NPRM), the RFA does not apply and a
regulatory flexibility analysis is not required. Nonetheless, the
Departments have considered the likely impact of the rules on small
entities and believe that the rules will not have a significant impact
on a substantial number of small entities for the following reasons:
(1) the major provisions of the rules mirror the statutory provisions,
which are largely self-executing and do not afford the Departments
substantial discretion to exercise regulatory flexibility; (2) the
interpretations or clarifications to the statutory provisions that are
made by these rules are minor and will not have a significant impact;
and (3) because most States have laws that apply in place of the NMHPA
standards, in those States the interim rules will not apply to
insurance issuers, which are subject to State law, and will have no
impact on group health plans that purchase insurance in those States.
Therefore the main impact of these rules will be on group health plans
that self-insure. Because small plans are more likely to purchase
State-regulated insurance than to self-insure, they will be less likely
to be affected by these rules.
Although, for the reasons stated, we believe that these rules will
not have a significant impact on small entities, specific data that
would permit a complete evaluation of the impact on small entities is
not currently available. Therefore, the Departments invite interested
persons to submit comments on the impact of these rules on small
entities for consideration in the development of the final rules
implementing NMHPA. Consistent with the RFA, the Departments also
encourage the public to submit comments on alternative rules that will
accomplish the stated purpose of NMHPA and minimize the impact on small
entities.
Unfunded Mandates Reform Act of 1995
The Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4)
requires agencies to prepare several analytic statements before
proposing any rules that may result in annual expenditures of $100
million by State, local, and Indian tribal governments or the private
sector. These rules are not subject to the UMRA because they are
interim rules. However, consistent with the policy embodied in the
UMRA, the interim rules have been designed to be the least burdensome
alternative for State, local, tribal governments, and the private
sector.
Small Business Regulatory Enforcement Fairness Act of 1996
The Administrator of the Office of Information and Regulatory
Affairs of OMB has determined that this is a major rule for purposes of
the Small Business Regulatory Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.) (SBREFA). In general, SBREFA provides, among other
things, that a federal agency must submit all rules for full
Congressional review. Pursuant to SBREFA, Congress has 60 session days
to review and approve or disapprove a major rule. The Secretaries have
determined that the effective date of these interim rules is January 1,
1999. Because the effective date of these interim rules is more than 60
days after publication in the Federal Register and receipt by Congress,
the requirements of SBREFA have been satisfied with respect to these
rules.
Statutory Authority
The Department of the Treasury temporary rule is adopted pursuant
to the authority contained in section 7805 and in section 9833 of the
Code (26 U.S.C. 7805, 9833), as added by HIPAA (Pub. L. 104-191, 110
Stat. 1936) and amended by TRA '97 (Pub. L. 105-34, 111 Stat. 788).
The Department of Labor interim final rule is adopted pursuant to
the authority contained in sections 505, 711, 734 of ERISA (29 U.S.C.
1135, 1181, and 1194), as added by HIPAA (Pub. L. 104-191, 110 Stat.
1936) and amended by NMHPA (Pub. L. 104-204, 110 Stat. 2935), and
Secretary of Labor's Order No. 1-87, 52 FR 13139, April 21, 1987.
The HHS interim final rule is adopted pursuant to the authority
contained in sections 2701 through 2763, 2791, and 2792 of the PHS Act
(42 U.S.C.300gg through 300gg-63, 300gg-91, and 300gg-92), as added by
HIPAA (Pub. L. 104-191, 110 Stat. 1936) and amended by NMHPA (Pub. L.
104-204, 110 Stat. 2935).
List of Subjects
26 CFR Part 54
Excise taxes, Health insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 2590
Employee benefit plans, Employee Retirement Income Security Act,
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Parts 144 and 146
Health care, Health insurance, Reporting and recordkeeping
requirements, State regulation of health insurance.
45 CFR Part 148
Administrative practice and procedure, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
INTERNAL REVENUE SERVICE 26 CFR CHAPTER I
Accordingly, 26 CFR Part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
Paragraph 1. The authority citation for part 54 is amended by
adding an entry for Sec. 54.9811-1T in numerical order to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 54.9811-1T also issued under 26 U.S.C. 9833. * * *
Par. 2. Section 54.9801-1T is amended by:
1. Revising paragraph (a).
2. Revising the first sentence of paragraph (c).
The revisions read as follows:
Sec. 54.9801-1T Basis and scope (temporary).
(a) Statutory basis. Sections 54.9801-1T through 54.9801-6T,
54.9802-1T, 54.9811-1T, 54.9812-1T, 54.9831-1T, and 54.9833-1T
(portability sections) implement Chapter 100 of Subtitle K of the
Internal Revenue Code of 1986.
* * * * *
(c) Similar Requirements under the Public Health Service Act and
Employee Retirement Income Security Act. Sections 2701, 2702, 2704,
2705, 2721, and 2791 of the Public Health Service Act and sections 701,
702, 703, 711, 712, 732, and 733 of the Employee
[[Page 57554]]
Retirement Income Security Act of 1974 impose requirements similar to
those imposed under Chapter 100 of Subtitle K with respect to health
insurance issuers offering group health insurance coverage. * * *
* * * * *
Par. 3. In Sec. 54.9801-2T, the introductory text is revised to
read as follows:
Sec. 54.9801-2T Definitions (temporary).
Unless otherwise provided, the definitions in this section govern
in applying the provisions of Secs. 54.9801-1T through 54.9801-6T,
54.9802-1T, 54.9811-1T, 54.9812-1T, 54.9831-1T, and 54.9833-1T.
* * * * *
Par. 4. Section 54.9811-1T is added to read as follows:
Sec. 54.9811-1 Standards relating to benefits for mothers and newborns
(temporary).
(a) Hospital length of stay--(1) General rule. Except as provided
in paragraph (a)(5) of this section, a group health plan that provides
benefits for a hospital length of stay in connection with childbirth
for a mother or her newborn may not restrict benefits for the stay to
less than--
(i) 48 hours following a vaginal delivery; or
(ii) 96 hours following a delivery by cesarean section.
(2) When stay begins--(i) Delivery in a hospital. If delivery
occurs in a hospital, the hospital length of stay for the mother or
newborn child begins at the time of delivery (or in the case of
multiple births, at the time of the last delivery).
(ii) Delivery outside a hospital. If delivery occurs outside a
hospital, the hospital length of stay begins at the time the mother or
newborn is admitted as a hospital inpatient in connection with
childbirth. The determination of whether an admission is in connection
with childbirth is a medical decision to be made by the attending
provider.
(3) Examples. The rules of paragraphs (a)(1) and (2) of this
section are illustrated by the following examples. In each example, the
group health plan provides benefits for hospital lengths of stay in
connection with childbirth and is subject to the requirements of this
section, as follows:
Example 1. (i) A pregnant woman covered under a group health
plan goes into labor and is admitted to the hospital at 10 p.m. on
June 11. She gives birth by vaginal delivery at 6 a.m. on June 12.
(ii) In this Example 1, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
Example 2. (i) A woman covered under a group health plan gives
birth at home by vaginal delivery. After the delivery, the woman
begins bleeding excessively in connection with the childbirth and is
admitted to the hospital for treatment of the excessive bleeding at
7 p.m. on October 1.
(ii) In this Example 2, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
Example 3. (i) A woman covered under a group health plan gives
birth by vaginal delivery at home. The child later develops
pneumonia and is admitted to the hospital. The attending provider
determines that the admission is not in connection with childbirth.
(ii) In this Example 3, the hospital length-of-stay requirements
of this section do not apply to the child's admission to the
hospital because the admission is not in connection with childbirth.
(4) Authorization not required--(i) In general. A plan may not
require that a physician or other health care provider obtain
authorization from the plan, or from a health insurance issuer offering
health insurance coverage under the plan, for prescribing the hospital
length of stay required under paragraph (a)(1) of this section. (See
also paragraphs (b)(2) and (c)(3) of this section for rules and
examples regarding other authorization and certain notice
requirements.)
(ii) Example. The rule of this paragraph (a)(4) is illustrated by
the following example:
Example. (i) In the case of a delivery by cesarean section, a
group health plan subject to the requirements of this section
automatically provides benefits for any hospital length of stay of
up to 72 hours. For any longer stay, the plan requires an attending
provider to complete a certificate of medical necessity. The plan
then makes a determination, based on the certificate of medical
necessity, whether a longer stay is medically necessary.
(ii) In this Example, the requirement that an attending provider
complete a certificate of medical necessity to obtain authorization
for the period between 72 hours and 96 hours following a delivery by
cesarean section is prohibited by this paragraph (a)(4).
(5) Exceptions--(i) Discharge of mother. If a decision to discharge
a mother earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother, the requirements of paragraph (a)(1) of this section do not
apply for any period after the discharge.
(ii) Discharge of newborn. If a decision to discharge a newborn
child earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother (or the newborn's authorized representative), the requirements
of paragraph (a)(1) of this section do not apply for any period after
the discharge.
(iii) Attending provider defined. For purposes of this section,
attending provider means an individual who is licensed under applicable
State law to provide maternity or pediatric care and who is directly
responsible for providing maternity or pediatric care to a mother or
newborn child.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) A pregnant woman covered under a group health plan
subject to the requirements of this section goes into labor and is
admitted to a hospital. She gives birth by cesarean section. On the
third day after the delivery, the attending provider for the mother
consults with the mother, and the attending provider for the newborn
consults with the mother regarding the newborn. The attending
providers authorize the early discharge of both the mother and the
newborn. Both are discharged approximately 72 hours after the
delivery. The plan pays for the 72-hour hospital stays.
(ii) In this Example, the requirements of this paragraph (a)
have been satisfied with respect to the mother and the newborn. If
either is readmitted, the hospital stay for the readmission is not
subject to this section.
(b) Prohibitions--(1) With respect to mothers--(i) In general. A
group health plan may not--
(A) Deny a mother or her newborn child eligibility or continued
eligibility to enroll or renew coverage under the terms of the plan
solely to avoid the requirements of this section; or
(B) Provide payments (including payments-in-kind) or rebates to a
mother to encourage her to accept less than the minimum protections
available under this section.
(ii) Examples. The rules of this paragraph (b)(1) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section; as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. If a mother and newborn covered under the plan are
discharged within 24 hours after the delivery, the plan will waive
the copayment and deductible.
(ii) In this Example 1, because waiver of the copayment and
deductible is in the nature of a rebate that the mother would not
receive if she and her newborn remained in the hospital, it is
prohibited by this paragraph (b)(1). (In addition, the plan violates
paragraph (b)(2) of this section because, in effect, no copayment or
deductible is required for the first portion of the stay and a
double copayment and a deductible are required for the second
portion of the stay.)
Example 2. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. In the event that a mother and her newborn are discharged
earlier than 48 hours
[[Page 57555]]
and the discharges occur after consultation with the mother in
accordance with the requirements of paragraph (a)(5) of this
section, the plan provides for a follow-up visit by a nurse within
48 hours after the discharges to provide certain services that the
mother and her newborn would otherwise receive in the hospital.
(ii) In this Example 2, because the follow-up visit does not
provide any services beyond what the mother and her newborn would
receive in the hospital, coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit restrictions--(i) In general. Subject
to paragraph (c)(3) of this section, a group health plan may not
restrict the benefits for any portion of a hospital length of stay
required under paragraph (a) of this section in a manner that is less
favorable than the benefits provided for any preceding portion of the
stay.
(ii) Example. The rules of this paragraph (b)(2) are illustrated by
the following example:
Example. (i) A group health plan subject to the requirements of
this section provides benefits for hospital lengths of stay in
connection with childbirth. In the case of a delivery by cesarean
section, the plan automatically pays for the first 48 hours. With
respect to each succeeding 24-hour period, the participant or
beneficiary must call the plan to obtain precertification from a
utilization reviewer, who determines if an additional 24-hour period
is medically necessary. If this approval is not obtained, the plan
will not provide benefits for any succeeding 24-hour period.
(ii) In this Example, the requirement to obtain precertification
for the two 24-hour periods immediately following the initial 48-
hour stay is prohibited by this paragraph (b)(2) because benefits
for the latter part of the stay are restricted in a manner that is
less favorable than benefits for a preceding portion of the stay.
(However, this section does not prohibit a plan from requiring
precertification for any period after the first 96 hours.) In
addition, if the plan's utilization reviewer denied any mother or
her newborn benefits within the 96-hour stay, the plan would also
violate paragraph (a) of this section.
(3) With respect to attending providers. A group health plan may
not directly or indirectly
(i) Penalize (for example, take disciplinary action against or
retaliate against), or otherwise reduce or limit the compensation of,
an attending provider because the provider furnished care to a
participant or beneficiary in accordance with this section; or
(ii) Provide monetary or other incentives to an attending provider
to induce the provider to furnish care to a participant or beneficiary
in a manner inconsistent with this section, including providing any
incentive that could induce an attending provider to discharge a mother
or newborn earlier than 48 hours (or 96 hours) after delivery.
(c) Construction. With respect to this section, the following rules
of construction apply:
(1) Hospital stays not mandatory. This section does not require a
mother to--
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed period of time following the
birth of her child.
(2) Hospital stay benefits not mandated. This section does not
apply to any group health plan that does not provide benefits for
hospital lengths of stay in connection with childbirth for a mother or
her newborn child.
(3) Cost-sharing rules--(i) In general. This section does not
prevent a group health plan from imposing deductibles, coinsurance, or
other cost-sharing in relation to benefits for hospital lengths of stay
in connection with childbirth for a mother or a newborn under the plan
or coverage, except that the coinsurance or other cost-sharing for any
portion of the hospital length of stay required under paragraph (a) of
this section may not be greater than that for any preceding portion of
the stay.
(ii) Examples. The rules of this paragraph (c)(3) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section, as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay in connection with vaginal
deliveries. The plan covers 80 percent of the cost of the stay for
the first 24-hour period and 50 percent of the cost of the stay for
the second 24-hour period. Thus, the coinsurance paid by the patient
increases from 20 percent to 50 percent after 24 hours.
(ii) In this Example 1, the plan violates the rules of this
paragraph (c)(3) because coinsurance for the second 24-hour period
of the 48-hour stay is greater than that for the preceding portion
of the stay. (In addition, the plan also violates the similar rule
in paragraph (b)(2) of this section.)
Example 2. (i) A group health plan generally covers 70 percent
of the cost of a hospital length of stay in connection with
childbirth. However, the plan will cover 80 percent of the cost of
the stay if the participant or beneficiary notifies the plan of the
pregnancy in advance of admission and uses whatever hospital the
plan may designate.
(ii) In this Example 2, the plan does not violate the rules of
this paragraph (c)(3) because the level of benefits provided (70
percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this
section. (In addition, the plan does not violate the rules in
paragraph (a)(4) or (b)(2) of this section.)
(4) Compensation of attending provider. This section does not
prevent a group health plan from negotiating with an attending provider
the level and type of compensation for care furnished in accordance
with this section (including paragraph (b) of this section).
(d) Notice requirement. See 29 CFR 2520.102-3(u) and (v)(2) for
rules relating to a notice requirement imposed under section 711 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1181) on
certain group health plans that provide benefits for hospital lengths
of stay in connection with childbirth.
(e) Applicability in certain States--(1) Health insurance coverage.
The requirements of section 9811 and this section do not apply with
respect to health insurance coverage offered in connection with a group
health plan if there is a State law regulating the coverage that meets
any of the following criteria:
(i) The State law requires the coverage to provide for at least a
48-hour hospital length of stay following a vaginal delivery and at
least a 96-hour hospital length of stay following a delivery by
cesarean section.
(ii) The State law requires the coverage to provide for maternity
and pediatric care in accordance with guidelines established by the
American College of Obstetricians and Gynecologists, the American
Academy of Pediatrics, or any other established professional medical
association.
(iii) The State law requires, in connection with the coverage for
maternity care, that the hospital length of stay for such care is left
to the decision of (or is required to be made by) the attending
provider in consultation with the mother. State laws that require the
decision to be made by the attending provider with the consent of the
mother satisfy the criterion of this paragraph (e)(1)(iii).
(2) Group health plans--(i) Fully-insured plans. For a group health
plan that provides benefits solely through health insurance coverage,
if the State law regulating the health insurance coverage meets any of
the criteria in paragraph (e)(1) of this section, then the requirements
of section 9811 and this section do not apply.
(ii) Self-insured plans. For a group health plan that provides all
benefits for hospital lengths of stay in connection with childbirth
other than through health insurance coverage, the requirements of
section 9811 and this section apply.
(iii) Partially-insured plans. For a group health plan that
provides some benefits through health insurance coverage, if the State
law regulating the health insurance coverage meets any of
[[Page 57556]]
the criteria in paragraph (e)(1) of this section, then the requirements
of section 9811 and this section apply only to the extent the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage.
(3) Preemption provisions under ERISA. See 29 CFR 2590.711(e)(3)
regarding how rules parallel to those under paragraph (e)(1) of this
section relate to other preemption provisions under the Employee
Retirement Income Security Act of 1974.
(4) Examples. The rules of this paragraph (e) are illustrated by
the following examples:
Example 1. (i) A group health plan buys group health insurance
coverage in a State that requires that the coverage provide for at
least a 48-hour hospital length of stay following a vaginal delivery
and at least a 96-hour hospital length of stay following a delivery by
cesarean section.
(ii) In this Example 1, the coverage is subject to State law,
and the requirements of section 9811 and this section do not apply.
Example 2. (i) A self-insured group health plan covers hospital
lengths of stay in connection with childbirth in a State that
requires health insurance coverage to provide for maternity care in
accordance with guidelines established by the American College of
Obstetricians and Gynecologists and to provide for pediatric care in
accordance with guidelines established by the American Academy of
Pediatrics.
(ii) In this Example 2, even though the State law satisfies the
criterion of paragraph (e)(1)(ii) of this section, because the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage, the plan is
subject to the requirements of section 9811 and this section.
(f) Effective date. Section 9811 applies to group health plans for
plan years beginning on or after January 1, 1998. This section applies
to group health plans for plan years beginning on or after January 1,
1999.
Par. 5. In Sec. 54.9831-1T, paragraph (b)(1) is revised to read as
follows:
Sec. 54.9831-1T Special rules relating to group health plans
(temporary).
* * * * *
(b) Excepted benefits--(1) In general. The requirements of
Secs. 54.9801-1T through 54.9801-6T, 54.9802-1T, 54.9811-1T, and
54.9812-1T do not apply to any group health plan in relation to its
provision of the benefits described in paragraph (b)(2), (3), (4), or
(5) of this section (or any combination of these benefits).
* * * * *
Approved: August 14, 1998.
Michael P. Dolan,
Deputy Commissioner of Internal Revenue.
Donald C. Lubick,
Assistant Secretary of the Treasury.
PENSION AND WELFARE BENEFITS ADMINISTRATION 29 CFR CHAPTER XXV
29 CFR Part 2590--is amended as follows:
PART 2590--RULES AND REGULATIONS FOR HEALTH INSURANCE PORTABILITY
AND RENEWABILITY FOR GROUP HEALTH PLANS
1. The authority citation for Part 2590 is revised to read as
follows:
Authority: Secs. 107, 209, 505, 701-703, 711, 712, and 731-734
of ERISA (29 U.S.C. 1027, 1059, 1135, 1171-1173, 1181, 1182, and
1191-1194), as amended by HIPAA (Pub. L. 104-191, 110 Stat. 1936)
and NMHPA (Pub. L. 104-204, 110 Stat. 2935), and Secretary of
Labor's Order No. 1-87, 52 FR 13139, April 21, 1987.
Subpart B--Other Requirements
2. Section 2590.711 is revised to read as follows:
Sec. 2590.711 Standards relating to benefits for mothers and newborns.
(a) Hospital length of stay--(1) General rule. Except as provided
in paragraph (a)(5) of this section, a group health plan, or a health
insurance issuer offering group health insurance coverage, that
provides benefits for a hospital length of stay in connection with
childbirth for a mother or her newborn may not restrict benefits for
the stay to less than--
(i) 48 hours following a vaginal delivery; or
(ii) 96 hours following a delivery by cesarean section.
(2) When stay begins--(i) Delivery in a hospital. If delivery
occurs in a hospital, the hospital length of stay for the mother or
newborn child begins at the time of delivery (or in the case of
multiple births, at the time of the last delivery).
(ii) Delivery outside a hospital. If delivery occurs outside a
hospital, the hospital length of stay begins at the time the mother or
newborn is admitted as a hospital inpatient in connection with
childbirth. The determination of whether an admission is in connection
with childbirth is a medical decision to be made by the attending
provider.
(3) Examples. The rules of paragraphs (a)(1) and (2) of this
section are illustrated by the following examples. In each example, the
group health plan provides benefits for hospital lengths of stay in
connection with childbirth and is subject to the requirements of this
section, as follows:
Example 1. (i) A pregnant woman covered under a group health
plan goes into labor and is admitted to the hospital at 10 p.m. on
June 11. She gives birth by vaginal delivery at 6 a.m. on June 12.
(ii) In this Example 1, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
Example 2. (i) A woman covered under a group health plan gives
birth at home by vaginal delivery. After the delivery, the woman
begins bleeding excessively in connection with the childbirth and is
admitted to the hospital for treatment of the excessive bleeding at
7 p.m. on October 1.
(ii) In this Example 2, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
Example 3. (i) A woman covered under a group health plan gives
birth by vaginal delivery at home. The child later develops
pneumonia and is admitted to the hospital. The attending provider
determines that the admission is not in connection with childbirth.
(ii) In this Example 3, the hospital length-of-stay requirements
of this section do not apply to the child's admission to the
hospital because the admission is not in connection with childbirth.
(4) Authorization not required--(i) In general. A plan or issuer
may not require that a physician or other health care provider obtain
authorization from the plan or issuer for prescribing the hospital
length of stay required under paragraph (a)(1) of this section. (See
also paragraphs (b)(2) and (c)(3) of this section for rules and
examples regarding other authorization and certain notice
requirements.)
(ii) Example. The rule of this paragraph (a)(4) is illustrated by
the following example:
Example. (i) In the case of a delivery by caesarean section, a
group health plan subject to the requirements of this section
automatically provides benefits for any hospital length of stay of
up to 72 hours. For any longer stay, the plan requires an attending
provider to complete a certificate of medical necessity. The plan
then makes a determination, based on the certificate of medical
necessity, whether a longer stay is medically necessary.
(ii) In this Example, the requirement that an attending provider
complete a certificate of medical necessity to obtain authorization
for the period between 72 hours and 96 hours following a delivery by
caesarean section is prohibited by this paragraph (a)(4).
(5) Exceptions--(i) Discharge of mother. If a decision to discharge
a mother earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother, the requirements of paragraph (a)(1) of this section do not
apply for any period after the discharge.
[[Page 57557]]
(ii) Discharge of newborn. If a decision to discharge a newborn
child earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother (or the newborn's authorized representative), the requirements
of paragraph (a)(1) of this section do not apply for any period after
the discharge.
(iii) Attending provider defined. For purposes of this section,
attending provider means an individual who is licensed under applicable
State law to provide maternity or pediatric care and who is directly
responsible for providing maternity or pediatric care to a mother or
newborn child.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) A pregnant woman covered under a group health plan
subject to the requirements of this section goes into labor and is
admitted to a hospital. She gives birth by caesarean section. On the
third day after the delivery, the attending provider for the mother
consults with the mother, and the attending provider for the newborn
consults with the mother regarding the newborn. The attending
providers authorize the early discharge of both the mother and the
newborn. Both are discharged approximately 72 hours after the
delivery. The plan pays for the 72-hour hospital stays.
(ii) In this Example, the requirements of this paragraph (a)
have been satisfied with respect to the mother and the newborn. If
either is readmitted, the hospital stay for the readmission is not
subject to this section.
(b) Prohibitions--(1) With respect to mothers--(i) In general. A
group health plan, and a health insurance issuer offering group health
insurance coverage, may not--
(A) Deny a mother or her newborn child eligibility or continued
eligibility to enroll or renew coverage under the terms of the plan
solely to avoid the requirements of this section; or
(B) Provide payments (including payments-in-kind) or rebates to a
mother to encourage her to accept less than the minimum protections
available under this section.
(ii) Examples. The rules of this paragraph (b)(1) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section, as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. If a mother and newborn covered under the plan are
discharged within 24 hours after the delivery, the plan will waive
the copayment and deductible.
(ii) In this Example 1, because waiver of the copayment and
deductible is in the nature of a rebate that the mother would not
receive if she and her newborn remained in the hospital, it is
prohibited by this paragraph (b)(1). (In addition, the plan violates
paragraph (b)(2) of this section because, in effect, no copayment or
deductible is required for the first portion of the stay and a
double copayment and a deductible are required for the second
portion of the stay.)
Example 2. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. In the event that a mother and her newborn are discharged
earlier than 48 hours and the discharges occur after consultation
with the mother in accordance with the requirements of paragraph
(a)(5) of this section, the plan provides for a follow-up visit by a
nurse within 48 hours after the discharges to provide certain
services that the mother and her newborn would otherwise receive in
the hospital.
(ii) In this Example 2, because the follow-up visit does not
provide any services beyond what the mother and her newborn would
receive in the hospital, coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit restrictions--(i) In general. Subject
to paragraph (c)(3) of this section, a group health plan, and a health
insurance issuer offering group health insurance coverage, may not
restrict the benefits for any portion of a hospital length of stay
required under paragraph (a) of this section in a manner that is less
favorable than the benefits provided for any preceding portion of the
stay.
(ii) Example. The rules of this paragraph (b)(2) are illustrated by
the following example:
Example. (i) A group health plan subject to the requirements of
this section provides benefits for hospital lengths of stay in
connection with childbirth. In the case of a delivery by caesarean
section, the plan automatically pays for the first 48 hours. With
respect to each succeeding 24-hour period, the participant or
beneficiary must call the plan to obtain precertification from a
utilization reviewer, who determines if an additional 24-hour period
is medically necessary. If this approval is not obtained, the plan
will not provide benefits for any succeeding 24-hour period.
(ii) In this Example, the requirement to obtain precertification
for the two 24-hour periods immediately following the initial 48-
hour stay is prohibited by this paragraph (b)(2) because benefits
for the latter part of the stay are restricted in a manner that is
less favorable than benefits for a preceding portion of the stay.
(However, this section does not prohibit a plan from requiring
precertification for any period after the first 96 hours.) In
addition, if the plan's utilization reviewer denied any mother or
her newborn benefits within the 96-hour stay, the plan would also
violate paragraph (a) of this section.
(3) With respect to attending providers. A group health plan, and a
health insurance issuer offering group health insurance coverage, may
not directly or indirectly--
(i) Penalize (for example, take disciplinary action against or
retaliate against), or otherwise reduce or limit the compensation of,
an attending provider because the provider furnished care to a
participant or beneficiary in accordance with this section; or
(ii) Provide monetary or other incentives to an attending provider
to induce the provider to furnish care to a participant or beneficiary
in a manner inconsistent with this section, including providing any
incentive that could induce an attending provider to discharge a mother
or newborn earlier than 48 hours (or 96 hours) after delivery.
(c) Construction. With respect to this section, the following rules
of construction apply:
(1) Hospital stays not mandatory. This section does not require a
mother to--
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed period of time following the
birth of her child.
(2) Hospital stay benefits not mandated. This section does not
apply to any group health plan, or any group health insurance coverage,
that does not provide benefits for hospital lengths of stay in
connection with childbirth for a mother or her newborn child.
(3) Cost-sharing rules--(i) In general. This section does not
prevent a group health plan or a health insurance issuer offering group
health insurance coverage from imposing deductibles, coinsurance, or
other cost-sharing in relation to benefits for hospital lengths of stay
in connection with childbirth for a mother or a newborn under the plan
or coverage, except that the coinsurance or other cost-sharing for any
portion of the hospital length of stay required under paragraph (a) of
this section may not be greater than that for any preceding portion of
the stay.
(ii) Examples. The rules of this paragraph (c)(3) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section, as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay in connection with vaginal
deliveries. The plan covers 80 percent of the cost of the stay for
the first 24-hour period and 50 percent of the cost of the stay for
the second 24-hour period. Thus, the coinsurance paid by the patient
increases from 20 percent to 50 percent after 24 hours.
(ii) In this Example 1, the plan violates the rules of this
paragraph (c)(3) because coinsurance for the second 24-hour period
of the 48-hour stay is greater than that for the preceding portion
of the stay. (In addition,
[[Page 57558]]
the plan also violates the similar rule in paragraph (b)(2) of this
section.)
Example 2. (i) A group health plan generally covers 70 percent
of the cost of a hospital length of stay in connection with
childbirth. However, the plan will cover 80 percent of the cost of
the stay if the participant or beneficiary notifies the plan of the
pregnancy in advance of admission and uses whatever hospital the
plan may designate.
(ii) In this Example 2, the plan does not violate the rules of
this paragraph (c)(3) because the level of benefits provided (70
percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this
section. (In addition, the plan does not violate the rules in
paragraph (a)(4) or (b)(2) of this section.)
(4) Compensation of attending provider. This section does not
prevent a group health plan or a health insurance issuer offering group
health insurance coverage from negotiating with an attending provider
the level and type of compensation for care furnished in accordance
with this section (including paragraph (b) of this section).
(d) Notice requirement. See 29 CFR 2520.102-3 (u) and (v)(2)
(relating to the disclosure requirement under section 711(d) of the
Act).
(e) Applicability in certain States--(1) Health insurance coverage.
The requirements of section 711 of the Act and this section do not
apply with respect to health insurance coverage offered in connection
with a group health plan if there is a State law regulating the
coverage that meets any of the following criteria:
(i) The State law requires the coverage to provide for at least a
48-hour hospital length of stay following a vaginal delivery and at
least a 96-hour hospital length of stay following a delivery by
caesarean section.
(ii) The State law requires the coverage to provide for maternity
and pediatric care in accordance with guidelines established by the
American College of Obstetricians and Gynecologists, the American
Academy of Pediatrics, or any other established professional medical
association.
(iii) The State law requires, in connection with the coverage for
maternity care, that the hospital length of stay for such care is left
to the decision of (or is required to be made by) the attending
provider in consultation with the mother. State laws that require the
decision to be made by the attending provider with the consent of the
mother satisfy the criterion of this paragraph (e)(1)(iii).
(2) Group health plans--(i) Fully-insured plans. For a group health
plan that provides benefits solely through health insurance coverage,
if the State law regulating the health insurance coverage meets any of
the criteria in paragraph (e)(1) of this section, then the requirements
of section 711 of the Act and this section do not apply.
(ii) Self-insured plans. For a group health plan that provides all
benefits for hospital lengths of stay in connection with childbirth
other than through health insurance coverage, the requirements of
section 711 of the Act and this section apply.
(iii) Partially-insured plans. For a group health plan that
provides some benefits through health insurance coverage, if the State
law regulating the health insurance coverage meets any of the criteria
in paragraph (e)(1) of this section, then the requirements of section
711 of the Act and this section apply only to the extent the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage.
(3) Relation to section 731(a) of the Act. The preemption
provisions contained in section 731(a)(1) of the Act and
Sec. 2590.731(a) do not supersede a State law described in paragraph
(e)(1) of this section.
(4) Examples. The rules of this paragraph (e) are illustrated by
the following examples:
Example 1. (i) A group health plan buys group health insurance
coverage in a State that requires that the coverage provide for at
least a 48-hour hospital length of stay following a vaginal delivery
and at least a 96-hour hospital length of stay following a delivery
by caesarean section.
(ii) In this Example 1, the coverage is subject to State law,
and the requirements of section 711 of the Act and this section do
not apply.
Example 2. (i) A self-insured group health plan covers hospital
lengths of stay in connection with childbirth in a State that
requires health insurance coverage to provide for maternity care in
accordance with guidelines established by the American College of
Obstetricians and Gynecologists and to provide for pediatric care in
accordance with guidelines established by the American Academy of
Pediatrics.
(ii) In this Example 2, even though the State law satisfies the
criterion of paragraph (e)(1)(ii) of this section, because the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage, the plan is
subject to the requirements of section 711 of the Act and this
section.
(f) Effective date. Section 711 of the Act applies to group health
plans, and health insurance issuers offering group health insurance
coverage, for plan years beginning on or after January 1, 1998. This
section applies to group health plans, and health insurance issuers
offering group health insurance coverage, for plan years beginning on
or after January 1, 1999.
Signed at Washington, DC this 19th day of October, 1998.
Meredith Miller,
Deputy Assistant Secretary for Policy, Pension and Welfare Benefits
Administration, Department of Labor.
HEALTH CARE FINANCING ADMINISTRATION
45 CFR SUBTITLE A, SUBCHAPTER B
45 CFR subtitle A, subchapter B, 45 CFR subtitle A, subchapter B,
is amended as set forth below:
A. Part 144 is amended as follows:
PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE
1. The authority citation for part 144 continues to read as
follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public
Health Service Act, 42 U.S.C. 300gg through 300gg-63, 300gg-91, and
300gg-92.
2. Section 144.101 is revised to read as follows:
Sec. 144.101 Basis and purpose.
Part 146 of this subchapter implements sections 2701 through 2723
of the Public Health Service Act (PHS Act, 42 U.S.C. 300gg, et seq.).
Its purpose is to improve access to group health insurance coverage, to
guarantee the renewability of all coverage in the group market, and to
provide certain protections for mothers and newborns with respect to
coverage for hospital stays in connection with childbirth. Part 148 of
this subchapter implements sections 2741 through 2763 of the PHS Act.
Its purpose is to improve access to individual health insurance
coverage for certain eligible individuals who previously had group
coverage, to guarantee the renewability of all coverage in the
individual market, and to provide protections for mothers and newborns
with respect to coverage for hospital stays in connection with
childbirth. Sections 2791 and 2792 of the PHS Act define terms used in
the regulations in this subchapter and provide the basis for issuing
these regulations, respectively.
3. In Sec. 144.102, paragraph (b) is revised to read as follows:
Sec. 144.102 Scope and applicability.
* * * * *
(b) The protections afforded under 45 CFR parts 144 through 148 to
individuals and employers (and other sponsors of health insurance
offered in connection with a group health plan) are determined by
whether the coverage
[[Page 57559]]
involved is obtained in the small group market, the large group market,
or the individual market. Small employers, and individuals who are
eligible to enroll under the employer's plan, are guaranteed
availability of insurance coverage sold in the small group market.
Small and large employers are guaranteed the right to renew their group
coverage, subject to certain exceptions. Eligible individuals are
guaranteed availability of coverage sold in the individual market, and
all coverage in the individual market must be guaranteed renewable. All
coverage issued in the small or large group market, and in the
individual market, must provide certain protections for mothers and
newborns with respect to coverage for hospital stays in connection with
childbirth.
* * * * *
B. Part 146 is amended as follows:
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
1. The authority citation for part 146 continues to read as
follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the PHS
Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92).
2. In Sec. 146.101, paragraph (a) is revised, paragraphs (b)(2)
through (b)(4) are redesignated as paragraphs (b)(3) through (b)(5),
respectively, and a new paragraph (b)(2) is added to read as follows:
Sec. 146.101 Basis and scope.
(a) Statutory basis. This part implements sections 2701 through
2723 of the PHS Act. Its purpose is to improve access to group health
insurance coverage, to guarantee the renewability of all coverage in
the group market, and to provide certain protections for mothers and
newborns with respect to coverage for hospital stays in connection with
childbirth. Sections 2791 and 2792 of the PHS Act define terms used in
the regulations in this subchapter and provide the basis for issuing
these regulations, respectively.
(b) * * *
(2) Subpart C. Subpart C of this part sets forth the requirements
that apply to plans and issuers with respect to coverage for hospital
stays in connection with childbirth. It also sets forth the regulations
governing parity between medical/surgical benefits and mental health
benefits in group health plans and health insurance coverage offered by
issuers in connection with a group health plan.
* * * * *
Subpart C--Requirements Relating to Benefits
3. Section 146.130 is added to Subpart C to read as follows:
Sec. 146.130 Standards relating to benefits for mothers and newborns.
(a) Hospital length of stay--(1) General rule. Except as provided
in paragraph (a)(5) of this section, a group health plan, or a health
insurance issuer offering group health insurance coverage, that
provides benefits for a hospital length of stay in connection with
childbirth for a mother or her newborn may not restrict benefits for
the stay to less than--
(i) 48 hours following a vaginal delivery; or
(ii) 96 hours following a delivery by cesarean section.
(2) When stay begins--(i) Delivery in a hospital. If delivery
occurs in a hospital, the hospital length of stay for the mother or
newborn child begins at the time of delivery (or in the case of
multiple births, at the time of the last delivery).
(ii) Delivery outside a hospital. If delivery occurs outside a
hospital, the hospital length of stay begins at the time the mother or
newborn is admitted as a hospital inpatient in connection with
childbirth. The determination of whether an admission is in connection
with childbirth is a medical decision to be made by the attending
provider.
(3) Examples. The rules of paragraphs (a)(1) and (a)(2) of this
section are illustrated by the following examples. In each example, the
group health plan provides benefits for hospital lengths of stay in
connection with childbirth and is subject to the requirements of this
section, as follows:
Example 1. (i) A pregnant woman covered under a group health
plan goes into labor and is admitted to the hospital at 10 p.m. on
June 11. She gives birth by vaginal delivery at 6 a.m. on June 12.
(ii) In this Example 1, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
Example 2. (i) A woman covered under a group health plan gives
birth at home by vaginal delivery. After the delivery, the woman
begins bleeding excessively in connection with the childbirth and is
admitted to the hospital for treatment of the excessive bleeding at
7 p.m. on October 1.
(ii) In this Example 2, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
Example 3. (i) A woman covered under a group health plan gives
birth by vaginal delivery at home. The child later develops
pneumonia and is admitted to the hospital. The attending provider
determines that the admission is not in connection with childbirth.
(ii) In this Example 3, the hospital length-of-stay requirements
of this section do not apply to the child's admission to the
hospital because the admission is not in connection with childbirth.
(4) Authorization not required--(i) In general. A plan or issuer
may not require that a physician or other health care provider obtain
authorization from the plan or issuer for prescribing the hospital
length of stay required under paragraph (a)(1) of this section. (See
also paragraphs (b)(2) and (c)(3) of this section for rules and
examples regarding other authorization and certain notice
requirements.)
(ii) Example. The rule of this paragraph (a)(4) is illustrated by
the following example:
Example. (i) In the case of a delivery by cesarean section, a
group health plan subject to the requirements of this section
automatically provides benefits for any hospital length of stay of
up to 72 hours. For any longer stay, the plan requires an attending
provider to complete a certificate of medical necessity. The plan
then makes a determination, based on the certificate of medical
necessity, whether a longer stay is medically necessary.
(ii) In this Example, the requirement that an attending provider
complete a certificate of medical necessity to obtain authorization
for the period between 72 hours and 96 hours following a delivery by
cesarean section is prohibited by this paragraph (a)(4).
(5) Exceptions--(i) Discharge of mother. If a decision to discharge
a mother earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother, the requirements of paragraph (a)(1) of this section do not
apply for any period after the discharge.
(ii) Discharge of newborn. If a decision to discharge a newborn
child earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother (or the newborn's authorized representative), the requirements
of paragraph (a)(1) of this section do not apply for any period after
the discharge.
(iii) Attending provider defined. For purposes of this section,
attending provider means an individual who is licensed under applicable
State law to provide maternity or pediatric care and who is directly
responsible for providing maternity or pediatric care to a mother or
newborn child.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) A pregnant woman covered under a group health plan
subject to the requirements of this section goes into labor and is
admitted to a hospital. She gives birth
[[Page 57560]]
by cesarean section. On the third day after the delivery, the
attending provider for the mother consults with the mother, and the
attending provider for the newborn consults with the mother
regarding the newborn. The attending providers authorize the early
discharge of both the mother and the newborn. Both are discharged
approximately 72 hours after the delivery. The plan pays for the 72-
hour hospital stays.
(ii) In this Example, the requirements of this paragraph (a)
have been satisfied with respect to the mother and the newborn. If
either is readmitted, the hospital stay for the readmission is not
subject to this section.
(b) Prohibitions--(1) With respect to mothers--(i) In general. A
group health plan, and a health insurance issuer offering group health
insurance coverage, may not--
(A) Deny a mother or her newborn child eligibility or continued
eligibility to enroll or renew coverage under the terms of the plan
solely to avoid the requirements of this section; or
(B) Provide payments (including payments-in-kind) or rebates to a
mother to encourage her to accept less than the minimum protections
available under this section.
(ii) Examples. The rules of this paragraph (b)(1) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section, as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. If a mother and newborn covered under the plan are
discharged within 24 hours after the delivery, the plan will waive
the copayment and deductible.
(ii) In this Example 1, because waiver of the copayment and
deductible is in the nature of a rebate that the mother would not
receive if she and her newborn remained in the hospital, it is
prohibited by this paragraph (b)(1). (In addition, the plan violates
paragraph (b)(2) of this section because, in effect, no copayment or
deductible is required for the first portion of the stay and a
double copayment and a deductible are required for the second
portion of the stay.)
Example 2. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay following a vaginal
delivery. In the event that a mother and her newborn are discharged
earlier than 48 hours and the discharges occur after consultation
with the mother in accordance with the requirements of paragraph
(a)(5) of this section, the plan provides for a follow-up visit by a
nurse within 48 hours after the discharges to provide certain
services that the mother and her newborn would otherwise receive in
the hospital.
(ii) In this Example 2, because the follow-up visit does not
provide any services beyond what the mother and her newborn would
receive in the hospital, coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit restrictions--(i) In general. Subject
to paragraph (c)(3) of this section, a group health plan, and a health
insurance issuer offering group health insurance coverage, may not
restrict the benefits for any portion of a hospital length of stay
required under paragraph (a) of this section in a manner that is less
favorable than the benefits provided for any preceding portion of the
stay.
(ii) Example. The rules of this paragraph (b)(2) are illustrated by
the following example:
Example. (i) A group health plan subject to the requirements of
this section provides benefits for hospital lengths of stay in
connection with childbirth. In the case of a delivery by cesarean
section, the plan automatically pays for the first 48 hours. With
respect to each succeeding 24-hour period, the participant or
beneficiary must call the plan to obtain precertification from a
utilization reviewer, who determines if an additional 24-hour period
is medically necessary. If this approval is not obtained, the plan
will not provide benefits for any succeeding 24-hour period.
(ii) In this Example, the requirement to obtain precertification
for the two 24-hour periods immediately following the initial 48-
hour stay is prohibited by this paragraph (b)(2) because benefits
for the latter part of the stay are restricted in a manner that is
less favorable than benefits for a preceding portion of the stay.
(However, this section does not prohibit a plan from requiring
precertification for any period after the first 96 hours.) In
addition, if the plan's utilization reviewer denied any mother or
her newborn benefits within the 96-hour stay, the plan would also
violate paragraph (a) of this section.
(3) With respect to attending providers. A group health plan, and a
health insurance issuer offering group health insurance coverage, may
not directly or indirectly--
(i) Penalize (for example, take disciplinary action against or
retaliate against), or otherwise reduce or limit the compensation of,
an attending provider because the provider furnished care to a
participant or beneficiary in accordance with this section; or
(ii) Provide monetary or other incentives to an attending provider
to induce the provider to furnish care to a participant or beneficiary
in a manner inconsistent with this section, including providing any
incentive that could induce an attending provider to discharge a mother
or newborn earlier than 48 hours (or 96 hours) after delivery.
(c) Construction. With respect to this section, the following rules
of construction apply:
(1) Hospital stays not mandatory. This section does not require a
mother to--
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed period of time following the
birth of her child.
(2) Hospital stay benefits not mandated. This section does not
apply to any group health plan, or any group health insurance coverage,
that does not provide benefits for hospital lengths of stay in
connection with childbirth for a mother or her newborn child.
(3) Cost-sharing rules--(i) In general. This section does not
prevent a group health plan or a health insurance issuer offering group
health insurance coverage from imposing deductibles, coinsurance, or
other cost-sharing in relation to benefits for hospital lengths of stay
in connection with childbirth for a mother or a newborn under the plan
or coverage, except that the coinsurance or other cost-sharing for any
portion of the hospital length of stay required under paragraph (a) of
this section may not be greater than that for any preceding portion of
the stay.
(ii) Examples. The rules of this paragraph (c)(3) are illustrated
by the following examples. In each example, the group health plan is
subject to the requirements of this section, as follows:
Example 1. (i) A group health plan provides benefits for at
least a 48-hour hospital length of stay in connection with vaginal
deliveries. The plan covers 80 percent of the cost of the stay for
the first 24-hour period and 50 percent of the cost of the stay for
the second 24-hour period. Thus, the coinsurance paid by the patient
increases from 20 percent to 50 percent after 24 hours.
(ii) In this Example 1, the plan violates the rules of this
paragraph (c)(3) because coinsurance for the second 24-hour period
of the 48-hour stay is greater than that for the preceding portion
of the stay. (In addition, the plan also violates the similar rule
in paragraph (b)(2) of this section.)
Example 2. (i) A group health plan generally covers 70 percent
of the cost of a hospital length of stay in connection with
childbirth. However, the plan will cover 80 percent of the cost of
the stay if the participant or beneficiary notifies the plan of the
pregnancy in advance of admission and uses whatever hospital the
plan may designate.
(ii) In this Example 2, the plan does not violate the rules of
this paragraph (c)(3) because the level of benefits provided (70
percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this
section. (In addition, the plan does not violate the rules in
paragraph (a)(4) or paragraph (b)(2) of this section.)
(4) Compensation of attending provider. This section does not
prevent a group health plan or a health insurance issuer offering group
health insurance coverage from negotiating with an attending provider
the level and type of compensation for care furnished
[[Page 57561]]
in accordance with this section (including paragraph (b) of this
section).
(d) Notice requirement. Except as provided in paragraph (d)(4)of
this section, a group health plan that provides benefits for hospital
lengths of stay in connection with childbirth must meet the following
requirements:
(1) Required statement. The plan document that provides a
description of plan benefits to participants and beneficiaries must
disclose information that notifies participants and beneficiaries of
their rights under this section.
(2) Disclosure notice. To meet the disclosure requirement set forth
in paragraph (d)(1) of this section, the following disclosure notice
must be used:
Statement of Rights Under the Newborns' and Mothers' Health Protection
Act
Under federal law, group health plans and health insurance
issuers offering group health insurance coverage generally may not
restrict benefits for any hospital length of stay in connection with
childbirth for the mother or newborn child to less than 48 hours
following a vaginal delivery, or less than 96 hours following a
delivery by cesarean section. However, the plan or issuer may pay
for a shorter stay if the attending provider (e.g., your physician,
nurse midwife, or physician assistant), after consultation with the
mother, discharges the mother or newborn earlier.
Also, under federal law, plans and issuers may not set the level
of benefits or out-of-pocket costs so that any later portion of the
48-hour (or 96-hour) stay is treated in a manner less favorable to
the mother or newborn than any earlier portion of the stay.
In addition, a plan or issuer may not, under federal law,
require that a physician or other health care provider obtain
authorization for prescribing a length of stay of up to 48 hours (or
96 hours). However, to use certain providers or facilities, or to
reduce your out-of-pocket costs, you may be required to obtain
precertification. For information on precertification, contact your
plan administrator.
(3) Timing of disclosure. The disclosure notice in paragraph (d)(2)
of this section shall be furnished to each participant covered under a
group health plan, and each beneficiary receiving benefits under a
group health plan, not later than 60 days after the first day of the
first plan year beginning on or after January 1, 1999.
(4) Exceptions. The requirements of this paragraph (d) do not apply
in the following situations:
(i) Self-insured plans. The benefits for hospital lengths of stay
in connection with childbirth are not provided through health insurance
coverage, and the group health plan has made the election described in
Sec. 146.180 to be exempted from the requirements of this section.
(ii) Insured plans. The benefits for hospital lengths of stay in
connection with childbirth are provided through health insurance
coverage, and the coverage is regulated under a State law described in
paragraph (e) of this section.
(e) Applicability in certain States--(1) Health insurance coverage.
The requirements of section 2704 of the PHS Act and this section do not
apply with respect to health insurance coverage offered in connection
with a group health plan if there is a State law regulating the
coverage that meets any of the following criteria:
(i) The State law requires the coverage to provide for at least a
48-hour hospital length of stay following a vaginal delivery and at
least a 96-hour hospital length of stay following a delivery by
cesarean section.
(ii) The State law requires the coverage to provide for maternity
and pediatric care in accordance with guidelines established by the
American College of Obstetricians and Gynecologists, the American
Academy of Pediatrics, or any other established professional medical
association.
(iii) The State law requires, in connection with the coverage for
maternity care, that the hospital length of stay for such care is left
to the decision of (or is required to be made by) the attending
provider in consultation with the mother. State laws that require the
decision to be made by the attending provider with the consent of the
mother satisfy the criterion of this paragraph (e)(1)(iii).
(2) Group health plans--(i) Fully-insured plans. For a group health
plan that provides benefits solely through health insurance coverage,
if the State law regulating the health insurance coverage meets any of
the criteria in paragraph (e)(1) of this section, then the requirements
of section 2704 of the PHS Act and this section do not apply.
(ii) Self-insured plans. For a group health plan that provides all
benefits for hospital lengths of stay in connection with childbirth
other than through health insurance coverage, the requirements of
section 2704 of the PHS Act and this section apply.
(iii) Partially-insured plans. For a group health plan that
provides some benefits through health insurance coverage, if the State
law regulating the health insurance coverage meets any of the criteria
in paragraph (e)(1) of this section, then the requirements of section
2704 of the PHS Act and this section apply only to the extent the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage.
(3) Relation to section 2723(a) of the PHS Act. The preemption
provisions contained in section 2723(a)(1) of the PHS Act and
Sec. 146.143(a) do not supersede a State law described in paragraph
(e)(1) of this section.
(4) Examples. The rules of this paragraph (e) are illustrated by
the following examples:
Example 1. (i) A group health plan buys group health insurance
coverage in a State that requires that the coverage provide for at
least a 48-hour hospital length of stay following a vaginal delivery
and at least a 96-hour hospital length of stay following a delivery
by cesarean section.
(ii) In this Example 1, the coverage is subject to State law,
and the requirements of section 2704 of the PHS Act and this section
do not apply.
Example 2. (i) A self-insured group health plan covers hospital
lengths of stay in connection with childbirth in a State that
requires health insurance coverage to provide for maternity care in
accordance with guidelines established by the American College of
Obstetricians and Gynecologists and to provide for pediatric care in
accordance with guidelines established by the American Academy of
Pediatrics.
(ii) In this Example 2, even though the State law satisfies the
criterion of paragraph (e)(1)(ii) of this section, because the plan
provides benefits for hospital lengths of stay in connection with
childbirth other than through health insurance coverage, the plan is
subject to the requirements of section 2704 of the PHS Act and this
section.
(f) Effective date. Section 2704 of the PHS Act applies to group
health plans, and health insurance issuers offering group health
insurance coverage, for plan years beginning on or after January 1,
1998. This section applies to group health plans, and health insurance
issuers offering group health insurance coverage, for plan years
beginning on or after January 1, 1999.
C. Part 148 is amended as follows:
PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET
1. The authority citation for part 148 continues to read as
follows:
Authority: Secs. 2741 through 2763, 2791, and 2792 of the Public
Health Service Act (42 U.S.C. 300gg-41 through 300gg-63, 300gg-91,
and 300gg-92).
2. Section 148.101 is revised to read as follows:
Sec. 148.101 Basis and purpose.
This part implements sections 2741 through 2763 and 2791 and 2792
of the PHS Act. Its purpose is to improve access to individual health
insurance coverage for certain eligible individuals
[[Page 57562]]
who previously had group coverage, and to guarantee the renewability of
all coverage in the individual market. It also provides certain
protections for mothers and newborns with respect to coverage for
hospital stays in connection with childbirth.
3. In Sec. 148.102, paragraphs (a) heading, (a)(2), and (b) are
revised to read as follows:
Sec. 148.102 Scope, applicability, and effective dates.
(a) Scope and applicability. * * *
(2) The requirements of this part that pertain to guaranteed
availability of individual health insurance coverage for certain
eligible individuals apply to all issuers of individual health
insurance coverage in a State, unless the State implements an
acceptable alternative mechanism as described in Sec. 148.128. The
requirements that pertain to guaranteed renewability for all
individuals, and to protections for mothers and newborns with respect
to hospital stays in connection with childbirth, apply to all issuers
of individual health insurance coverage in the State, regardless of
whether a State implements an alternative mechanism.
(b) Effective date. Except as provided in Secs. 148.124
(certificate of coverage), 148.128 (alternative State mechanisms), and
148.170 (standards relating to benefits for mothers and newborns), the
requirements of this part apply to health insurance coverage offered,
sold, issued, renewed, in effect, or operated in the individual market
after June 30, 1997, regardless of when a period of creditable coverage
occurs.
4. A new subpart C is added to read as follows:
Subpart C--Requirements Related to Benefits
Sec. 148.170 Standards relating to benefits for mothers and newborns.
(a) Hospital length of stay--(1) General rule. Except as provided
in paragraph (a)(5) of this section, an issuer offering health
insurance coverage in the individual market that provides benefits for
a hospital length of stay in connection with childbirth for a mother or
her newborn may not restrict benefits for the stay to less than--
(i) 48 hours following a vaginal delivery; or
(ii) 96 hours following a delivery by cesarean section.
(2) When stay begins--(i) Delivery in a hospital. If delivery
occurs in a hospital, the hospital length of stay for the mother or
newborn child begins at the time of delivery (or in the case of
multiple births, at the time of the last delivery).
(ii) Delivery outside a hospital. If delivery occurs outside a
hospital, the hospital length of stay begins at the time the mother or
newborn is admitted as a hospital inpatient in connection with
childbirth. The determination of whether an admission is in connection
with childbirth is a medical decision to be made by the attending
provider.
(3) Examples. The rules of paragraphs (a)(1) and (a)(2) of this
section are illustrated by the following examples. In each example, the
issuer provides benefits for hospital lengths of stay in connection
with childbirth and is subject to the requirements of this section, as
follows:
Example 1. (i) A pregnant woman covered under a policy issued in
the individual market goes into labor and is admitted to the
hospital at 10 p.m. on June 11. She gives birth by vaginal delivery
at 6 a.m. on June 12.
(ii) In this Example 1, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 6 a.m. on June 14.
Example 2. (i) A woman covered under a policy issued in the
individual market gives birth at home by vaginal delivery. After the
delivery, the woman begins bleeding excessively in connection with
the childbirth and is admitted to the hospital for treatment of the
excessive bleeding at 7 p.m. on October 1.
(ii) In this Example 2, the 48-hour period described in
paragraph (a)(1)(i) of this section ends at 7 p.m. on October 3.
Example 3. (i) A woman covered under a policy issued in the
individual market gives birth by vaginal delivery at home. The child
later develops pneumonia and is admitted to the hospital. The
attending provider determines that the admission is not in
connection with childbirth.
(ii) In this Example 3, the hospital length-of-stay requirements
of this section do not apply to the child's admission to the
hospital because the admission is not in connection with childbirth.
(4) Authorization not required--(i) In general. An issuer may not
require that a physician or other health care provider obtain
authorization from the issuer for prescribing the hospital length of
stay required under paragraph (a)(1) of this section. (See also
paragraphs (b)(2) and (c)(3) of this section for rules and examples
regarding other authorization and certain notice requirements.)
(ii) Example. The rule of this paragraph (a)(4) is illustrated by
the following example:
Example. (i) In the case of a delivery by cesarean section, an
issuer subject to the requirements of this section automatically
provides benefits for any hospital length of stay of up to 72 hours.
For any longer stay, the issuer requires an attending provider to
complete a certificate of medical necessity. The issuer then makes a
determination, based on the certificate of medical necessity,
whether a longer stay is medically necessary.
(ii) In this Example, the requirement that an attending provider
complete a certificate of medical necessity to obtain authorization
for the period between 72 hours and 96 hours following a delivery by
cesarean section is prohibited by this paragraph (a)(4).
(5) Exceptions--(i) Discharge of mother. If a decision to discharge
a mother earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother, the requirements of paragraph (a)(1) of this section do not
apply for any period after the discharge.
(ii) Discharge of newborn. If a decision to discharge a newborn
child earlier than the period specified in paragraph (a)(1) of this
section is made by an attending provider, in consultation with the
mother (or the newborn's authorized representative), the requirements
of paragraph (a)(1) of this section do not apply for any period after
the discharge.
(iii) Attending provider defined. For purposes of this section,
attending provider means an individual who is licensed under applicable
State law to provide maternity or pediatric care and who is directly
responsible for providing maternity or pediatric care to a mother or
newborn child.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) A pregnant woman covered under a policy offered by
an issuer subject to the requirements of this section goes into
labor and is admitted to a hospital. She gives birth by cesarean
section. On the third day after the delivery, the attending provider
for the mother consults with the mother, and the attending provider
for the newborn consults with the mother regarding the newborn. The
attending providers authorize the early discharge of both the mother
and the newborn. Both are discharged approximately 72 hours after
the delivery. The issuer pays for the 72-hour hospital stays.
(ii) In this Example, the requirements of this paragraph (a)
have been satisfied with respect to the mother and the newborn. If
either is readmitted, the hospital stay for the readmission is not
subject to this section.
(b) Prohibitions--(1) With respect to mothers--(i) In general. An
issuer may not--
(A) Deny a mother or her newborn child eligibility or continued
eligibility to enroll in or renew coverage solely to avoid the
requirements of this section; or
(B) Provide payments (including payments-in-kind) or rebates to a
mother to encourage her to accept less than the minimum protections
available under this section.
(ii) Examples. The rules of this paragraph (b)(1) are illustrated
by the
[[Page 57563]]
following examples. In each example, the issuer is subject to the
requirements of this section, as follows:
Example 1. (i) An issuer provides benefits for at least a 48-
hour hospital length of stay following a vaginal delivery. If a
mother and newborn covered under a policy issued in the individual
market are discharged within 24 hours after the delivery, the issuer
will waive the copayment and deductible.
(ii) In this Example 1, because waiver of the copayment and
deductible is in the nature of a rebate that the mother would not
receive if she and her newborn remained in the hospital, it is
prohibited by this paragraph (b)(1). (In addition, the issuer
violates paragraph (b)(2) of this section because, in effect, no
copayment or deductible is required for the first portion of the
stay and a double copayment and a deductible are required for the
second portion of the stay.)
Example 2. (i) An issuer provides benefits for at least a 48-
hour hospital length of stay following a vaginal delivery. In the
event that a mother and her newborn are discharged earlier than 48
hours and the discharges occur after consultation with the mother in
accordance with the requirements of paragraph (a)(5) of this
section, the issuer provides for a follow-up visit by a nurse within
48 hours after the discharges to provide certain services that the
mother and her newborn would otherwise receive in the hospital.
(ii) In this Example 2, because the follow-up visit does not
provide any services beyond what the mother and her newborn would
receive in the hospital, coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit restrictions--(i) In general. Subject
to paragraph (c)(3) of this section, an issuer may not restrict the
benefits for any portion of a hospital length of stay required under
paragraph (a) of this section in a manner that is less favorable than
the benefits provided for any preceding portion of the stay.
(ii) Example. The rules of this paragraph (b)(2) are illustrated by
the following example:
Example. (i) An issuer subject to the requirements of this
section provides benefits for hospital lengths of stay in connection
with childbirth. In the case of a delivery by cesarean section, the
issuer automatically pays for the first 48 hours. With respect to
each succeeding 24-hour period, the covered individual must call the
issuer to obtain precertification from a utilization reviewer, who
determines if an additional 24-hour period is medically necessary.
If this approval is not obtained, the issuer will not provide
benefits for any succeeding 24-hour period.
(ii) In this Example, the requirement to obtain precertification
for the two 24-hour periods immediately following the initial 48-
hour stay is prohibited by this paragraph (b)(2) because benefits
for the latter part of the stay are restricted in a manner that is
less favorable than benefits for a preceding portion of the stay.
(However, this section does not prohibit an issuer from requiring
precertification for any period after the first 96 hours.) In
addition, if the issuer's utilization reviewer denied any mother or
her newborn benefits within the 96-hour stay, the issuer would also
violate paragraph (a) of this section.
(3) With respect to attending providers. An issuer may not directly
or indirectly ``
(i) Penalize (for example, take disciplinary action against or
retaliate against), or otherwise reduce or limit the compensation of,
an attending provider because the provider furnished care to a covered
individual in accordance with this section; or
(ii) Provide monetary or other incentives to an attending provider
to induce the provider to furnish care to a covered individual in a
manner inconsistent with this section, including providing any
incentive that could induce an attending provider to discharge a mother
or newborn earlier than 48 hours (or 96 hours) after delivery.
(c) Construction. With respect to this section, the following rules
of construction apply:
(1) Hospital stays not mandatory. This section does not require a
mother to
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed period of time following the
birth of her child.
(2) Hospital stay benefits not mandated. This section does not
apply to any issuer that does not provide benefits for hospital lengths
of stay in connection with childbirth for a mother or her newborn
child.
(3) Cost-sharing rules--(i) In general. This section does not
prevent an issuer from imposing deductibles, coinsurance, or other
cost-sharing in relation to benefits for hospital lengths of stay in
connection with childbirth for a mother or a newborn under the
coverage, except that the coinsurance or other cost-sharing for any
portion of the hospital length of stay required under paragraph (a) of
this section may not be greater than that for any preceding portion of
the stay.
(ii) Examples. The rules of this paragraph (c)(3) are illustrated
by the following examples. In each example, the issuer is subject to
the requirements of this section, as follows:
Example 1. (i) An issuer provides benefits for at least a 48-
hour hospital length of stay in connection with vaginal deliveries.
The issuer covers 80 percent of the cost of the stay for the first
24-hour period and 50 percent of the cost of the stay for the second
24-hour period. Thus, the coinsurance paid by the patient increases
from 20 percent to 50 percent after 24 hours.
(ii) In this Example 1, the issuer violates the rules of this
paragraph (c)(3) because coinsurance for the second 24-hour period
of the 48-hour stay is greater than that for the preceding portion
of the stay. (In addition, the issuer also violates the similar rule
in paragraph (b)(2) of this section.)
Example 2. (i) An issuer generally covers 70 percent of the cost
of a hospital length of stay in connection with childbirth. However,
the issuer will cover 80 percent of the cost of the stay if the
covered individual notifies the issuer of the pregnancy in advance
of admission and uses whatever hospital the issuer may designate.
(ii) In this Example 2, the issuer does not violate the rules of
this paragraph (c)(3) because the level of benefits provided (70
percent or 80 percent) is consistent throughout the 48-hour (or 96-
hour) hospital length of stay required under paragraph (a) of this
section. (In addition, the issuer does not violate the rules in
paragraph (a)(4) or paragraph (b)(2) of this section.)
(4) Compensation of attending provider. This section does not
prevent an issuer from negotiating with an attending provider the level
and type of compensation for care furnished in accordance with this
section (including paragraph (b) of this section).
(5) Applicability. This section applies to all health insurance
coverage issued in the individual market, and is not limited in its
application to coverage that is provided to eligible individuals as
defined in section 2741(b) of the PHS Act.
(d) Notice requirement. Except as provided in paragraph (d)(4) of
this section, an issuer offering health insurance in the individual
market must meet the following requirements with respect to benefits
for hospital lengths of stay in connection with childbirth:
(1) Required statement. The insurance contract must disclose
information that notifies covered individuals of their rights under
this section.
(2) Disclosure notice. To meet the disclosure requirement set forth
in paragraph (d)(1) of this section, the following disclosure notice
must be used:
Statement of Rights Under the Newborns' and Mothers' Health Protection
Act
Under federal law, health insurance issuers generally may not
restrict benefits for any hospital length of stay in connection with
childbirth for the mother or newborn child to less than 48 hours
following a vaginal delivery, or less than 96 hours following a
delivery by cesarean section. However, the issuer may pay for a
shorter stay if the attending provider (e.g., your physician, nurse
midwife, or physician assistant), after consultation with the
mother, discharges the mother or newborn earlier.
Also, under federal law, issuers may not set the level of
benefits or out-of-pocket costs
[[Page 57564]]
so that any later portion of the 48-hour (or 96-hour) stay is
treated in a manner less favorable to the mother or newborn than any
earlier portion of the stay.
In addition, an issuer may not, under federal law, require that
a physician or other health care provider obtain authorization for
prescribing a length of stay of up to 48 hours (or 96 hours).
However, to use certain providers or facilities, or to reduce your
out-of-pocket costs, you may be required to obtain precertification.
For information on precertification, contact your issuer.
(3) Timing of disclosure. The disclosure notice in paragraph (d)(2)
of this section shall be furnished to the covered individuals in the
form of a copy of the contract, or a rider (or equivalent amendment to
the contract), not later than March 1, 1999.
(4) Exception. The requirements of this paragraph (d) do not apply
with respect to coverage regulated under a State law described in
paragraph (e) of this section.
(e) Applicability in certain States--(1) Health insurance coverage.
The requirements of section 2751 of the PHS Act and this section do not
apply with respect to health insurance coverage in the individual
market if there is a State law regulating the coverage that meets any
of the following criteria:
(i) The State law requires the coverage to provide for at least a
48-hour hospital length of stay following a vaginal delivery and at
least a 96-hour hospital length of stay following a delivery by
cesarean section.
(ii) The State law requires the coverage to provide for maternity
and pediatric care in accordance with guidelines established by the
American College of Obstetricians and Gynecologists, the American
Academy of Pediatrics, or any other established professional medical
association.
(iii) The State law requires, in connection with the coverage for
maternity care, that the hospital length of stay for such care is left
to the decision of (or is required to be made by) the attending
provider in consultation with the mother. State laws that require the
decision to be made by the attending provider with the consent of the
mother satisfy the criterion of this paragraph (e)(1)(iii).
(2) Relation to section 2762(a) of the PHS Act. The preemption
provisions contained in section 2762(a) of the PHS Act and
Sec. 148.210(b) do not supersede a State law described in paragraph
(e)(1) of this section.
(f) Effective date. Section 2751 of the PHS Act applies to health
insurance coverage offered, sold, issued, renewed, in effect, or
operated in the individual market on or after January 1, 1998. This
section applies to health insurance coverage offered, sold, issued,
renewed, in effect, or operated in the individual market on or after
January 1, 1999.
Dated: August 27, 1998.
Nancy-Ann Min DeParle,
Administrator, Health Care Financing Administration.
Dated: September 21, 1998.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
[FR Doc. 98-28442 Filed 10-26-98; 8:45 am]
BILLING CODE 4120-01-P; 4830-01-P; 4510-29-P
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