[Federal Register: October 20, 2008 (Volume 73, Number 203)]
[Rules and Regulations]
[Page 62409-62429]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20oc08-12]
[[Page 62409]]
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Part III
Department of the Treasury
Internal Revenue Service
26 CFR Part 54
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Department of Labor
Employee Benefits Security Administration
29 CFR Part 2590
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Department of Health and Human Services
Centers for Medicare & Medicaid Services
45 CFR Parts 144, 146, and 148
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Final Rules for Group Health Plans and Health Insurance Issuers Under
the Newborn and Mothers, Health Protection Act; Final Rule
[[Page 62410]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9427]
RIN 1545-BG82
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AA63
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
45 CFR Parts 144, 146, and 148
RIN 0938-AI17
Final 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;
Employee Benefits Security Administration, Department of Labor; Centers
for Medicare & Medicaid Services, Department of Health and Human
Services.
ACTION: Final rules.
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SUMMARY: This document contains final rules for group health plans and
health insurance issuers concerning hospital lengths of stay for
mothers and newborns following childbirth, pursuant to the Newborns'
and Mothers' Health Protection Act of 1996 and the Taxpayer Relief Act
of 1997.
DATES: Effective Date: These final regulations are effective December
19, 2008.
Applicability Dates: Group market rules. These final regulations
for the group market apply to group health plans and group health
insurance issuers for plan years beginning on or after January 1, 2009.
Individual market rules. These final regulations 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, 2009.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Russ Weinheimer, Internal Revenue Service, Department of the
Treasury, at (202) 622-6080; or Adam Shaw, Centers for Medicare &
Medicaid Services, Department of Health and Human Services, at (877)
267-2323 extension 61091.
Customer service information: Individuals interested in obtaining
copies of Department of Labor publications concerning health care laws
may request copies by calling the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or may request a copy of CMS's publication entitled
``Protecting Your Health Insurance Coverage'' by calling 1-800-633-
4227. These regulations as well as other information on the Newborns'
and Mothers' Health Protection Act and other health care laws are also
available on the Department of Labor's Web site (http://www.dol.gov/
ebsa), including the interactive web pages, Health Elaws.
SUPPLEMENTARY INFORMATION:
I. Background
The Newborns' and Mothers' Health Protection Act of 1996 (Newborns'
Act), Public Law 104-204, was enacted on September 26, 1996. The rules
contained in this document implement changes made to the Employee
Retirement Income Security Act of 1974 (ERISA) and the Public Health
Service Act (PHS Act) made by the Newborns' Act, and parallel changes
to the Internal Revenue Code of 1986 (Code) enacted as part of the
Taxpayer Relief Act of 1997 (TRA '97). The Newborns' Act was enacted to
provide protections for mothers and their newborn children with regard
to hospital lengths of stay following childbirth. Interim final rules
implementing the group and individual market provisions of the
Newborns' Act were published in the Federal Register on October 27,
1998 (63 FR 57546) (the interim final rules).
These regulations being published today in the Federal Register
finalize the interim final rules. The final regulations implementing
the group market provisions of the Newborns' Act are issued jointly by
the Secretaries of the Treasury, Labor, and HHS.\1\ The individual
market final regulations are issued solely by HHS.\2\
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\1\ 26 CFR 54.9811-1, 29 CFR 2590.711, 45 CFR 146.130.
\2\ 45 CFR 148.170.
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II. Overview of the Regulations
Section 9811 of the Code, section 711 of ERISA, and sections 2704
and 2751 of the PHS Act (the Newborns' Act provisions) 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. The interim final rule--
Provided that the attending provider makes the
determination that an admission is in connection with childbirth;
Determined when the hospital stay begins for purposes of
application of the general rule;
Provided 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;
Clarified the application of authorization and
precertification requirements with respect to the 48-hour (or 96-hour)
stay;
Explained the application of benefit restrictions and
cost-sharing rules with respect to the 48-hour (or 96-hour) stay;
Clarified the prohibitions with respect to a plan or
issuer offering mothers incentives or disincentives to encourage less
than the 48-hour (or 96-hour) stay;
Clarified the prohibitions against incentives and
penalties with respect to attending providers; and
Included the statutory notice provisions under ERISA and
the PHS Act. In general, these final regulations do not change the
interim final rules. However, the text of these final regulations
incorporates a clarifying statement from the preamble of the interim
final rules that the definition of attending provider does not include
a plan, hospital, managed care organization, or other issuer. The text
also makes a small clarification with respect to state law
applicability.
In addition, these final regulations make minor clarifications to
the notice requirements for nonfederal governmental plans. The interim
final rules specified that the notice of post-childbirth
hospitalization benefits must be included in the plan document that
described plan benefits to participants and beneficiaries. These final
regulations specify that any notice a nonfederal governmental plan must
provide under these regulations can be included either in the plan
document that describes benefits, or in the type of document the plan
generally uses to inform participants and beneficiaries of plan benefit
changes. These final regulations also specify that any time a plan
distributes one or both of these documents after providing the initial
notice, the applicable statement must
[[Page 62411]]
appear in one or both of these documents.
Hospital Length of Stay
The interim final rules and these final regulations provide that
when a 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) rather than at the time of admission or onset of labor. Also,
the interim final rules and these final regulations provide that when a
delivery occurs outside of the hospital, the stay begins at the time
the mother or newborn is admitted (rather than at the time of
delivery).
Some comments expressed concern that this rule somehow required
birthing centers or other non-hospital facilities to extend the right
to stay to more than 24 hours. These comments noted that such extended
stays may violate local regulations or otherwise conflict with the
operations of such facilities. The statute and these final regulations
do not require hospitals or other facilities to provide particular
lengths of stay, but instead require group health plans and health
insurance issuers to provide benefits for particular hospital lengths
of stay.
A comment recommended that if a delivery was planned for outside of
a hospital, any following admission in response to complications
resulting from that delivery should be excluded from the provisions
providing for particular lengths of stay. These final regulations do
not distinguish between a delivery that was planned for outside of the
hospital and other deliveries occurring outside of a hospital.
Definition of Attending Provider
The mandatory coverage period provisions are not violated if the
attending provider, in consultation with the mother, decides to
discharge the mother or newborn earlier. Under the interim final rules
and these final regulations, the attending provider is defined by a
functional analysis of state licensure rules and the actual performance
of care. Under this definition, the attending provider is restricted to
an individual who is licensed under applicable state law to provide
maternal or pediatric care and who is directly responsible for
providing such care to a mother or newborn child. While the preamble to
the interim final rules noted that this definition could include a
nurse midwife or physician assistant, the regulation itself does not
provide a list of titles or positions that qualify as attending
providers.
Some comments requested that additional titles, such as pediatric
nurse practitioners, or nurse practitioners, be specifically mentioned
in the definition. While positions with these titles may meet the
definition in many cases, as noted above, the language of the
regulation takes a functional approach and does not provide a list of
titles or positions that qualify as attending providers. This
functional approach is more useful in addressing who the attending
provider is on an ongoing basis, as specific position titles and
responsibilities may vary from location to location as well as over
time.
It was also suggested that the text of the final regulations
incorporate a clarifying statement from the preamble of the interim
final rules that the definition of attending provider does not include
a plan, hospital, managed care organization, or other issuer. These
final regulations adopt this suggestion.
Compensation of Attending Provider
Several comments addressed the provisions in the interim final
rules that relate to the compensation of physicians and other attending
providers. These provisions prohibit plans and issuers from penalizing
attending providers who provide care in accordance with the
regulations, and prohibit plans and issuers from inducing attending
providers to provide care in a manner that is inconsistent with the
regulations. At the same time, the statute specifies that plans and
issuers are still free to negotiate with attending providers the level
and type of compensation for care furnished in accordance with the
regulations.
The comments requested greater specificity in the final regulations
for distinguishing between the types of compensation arrangements that
are permissible under the negotiation provision and those that are
impermissible under the prohibitions against penalties and inducements.
One comment suggested that it is clear that a bonus arrangement for
obstetricians and gynecologists contingent on the percentage of
discharges within 24 hours would not be permitted. The comment
requested confirmation that arrangements with a more general focus
would be permitted, such as a global payment for prenatal care and
childbirth, or a bonus for a multi-specialty group including
obstetricians and gynecologists based on the utilization for all
patients served by the group. Another comment expressed a concern about
whether capitated arrangements are consistent with the hospital length-
of-stay requirements.
The Departments devoted considerable resources over a sustained
period of time to develop rules that provide greater specificity for
distinguishing between negotiated compensation arrangements that would
give attending providers an incentive to deliver health care services
efficiently and arrangements that could give providers an incentive to
discharge patients in contravention of the statute and regulations. The
great variety, complexity, and mutability of such arrangements \3\
would have required extensive rules that at best were likely to impose
heavy administrative costs and yet were still of only marginal value in
clarifying what arrangements would be permissible. For this reason, the
rules on compensation arrangements for attending providers are adopted
unchanged from the interim final rules.
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\3\ Broad classes of examples include fee-for-service,
capitation, productivity-based salary, incentive contracting,
blended systems, prospective versus post-service payment, etc. See
e.g., Theory and Practice in the Design of Physician Payment
Incentives, James C. Robinson (University of California, Berkley),
The Milbank Quarterly, Vol. 79, No. 2, 2001; Regulation of Managed
Care Incentive Payments to Physicians, Stephen Latham (Boston
University School of Law), 22 Am. J.L. & Med. 399; Blended Payment
Methods in Physician Organizations Under Managed Care, James C.
Robinson, JAMA 1999;282:1258-1263; The Alignment and Blending of
Payment Incentives Within Physician Organizations, JC Robinson, SM
Shortell, R Li, LP Casalino, T Rundall, Health Services Research Vol
39, Issue 5, pages 1589-1606, Oct. 2004.
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The final regulations do not attempt to provide guidance on this
issue through examples. Certainly the bonus arrangement described in
one comment, based on the percentage of discharges within 24 hours,
violates the prohibition against providing inducements for early
discharge. Such an example is not included in the final regulations to
avoid the inference that anything less blatant would be permissible.
Examples of less blatant arrangements could be similarly misleading,
whether the conclusion was that the arrangement was permissible or
impermissible, since there are bound to be differences between
arrangements that would have been described in the regulations and any
actual arrangement for an attending provider, and in some cases even
minor differences could change the result.
Authorization and Precertification
The interim final rules and these final regulations provide, under
paragraph (a), that 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.
[[Page 62412]]
Under paragraph (b) of the interim final rules and these final
regulations, a plan or issuer may not restrict benefits for part of a
stay that is subject to the general rule in a way that is less
favorable than a prior portion of the stay. An example in the interim
final rules and these final regulations illustrates that 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 final 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.
Under paragraph (c) of the interim final rules and these final
regulations, 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 in the interim final rules and these final regulations
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.
One comment asked whether less favorable cost sharing for the 48-
hour (or 96-hour) stay can be applied to covered individuals who fail
to give advance notice or notice upon admission for the services or
providers related to the stay, if such a penalty applies in other
hospitalization situations. This issue was addressed in Example 2 of
paragraph (c)(3) of the interim final rules. This example is repeated
in the final regulations and illustrates that a plan may require
advance notice for services or providers related to hospital length of
stay in connection with childbirth, in order for a covered individual
to obtain more favorable cost sharing under the plan or coverage. Such
requirements may not be used to deny an individual benefits for any
portion of the 48-hour (or 96-hour) stay based on a determination of
medical necessity or appropriateness. Any variance in cost-sharing
related to compliance with a plan's or an issuer's advance notice
requirements must be applied consistently throughout the 48-hour (or
96-hour) stay. Under the principles set forth in the rule and
illustrated in this example, a plan or issuer could generally apply
less favorable cost sharing towards the hospital length of stay in
connection with childbirth of an individual who failed to satisfy the
plan's advance notice requirements, to the extent permissible under the
preexisting condition rules in 26 CFR 54.9801-3, 29 CFR 2590.701-3, and
45 CFR 146.111 and 148.120.\4\
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\4\ In order to avoid imposing an impermissible preexisting
condition exclusion, plans and group health insurance issuers that
require individuals to notify the plan or issuer of pregnancy within
a certain amount of time (for example, within the first trimester)
must waive or modify the notice requirement for individuals who
enroll in the plan after the time notice was required. This also
applies to individual market issuers with respect to federally
eligible individuals they are required to enroll.
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Notice Requirements under ERISA and the PHS Act
This section of the final regulations addresses the Newborns' Act
notice requirements under ERISA and the PHS Act. The interim final
rules, and these final regulations, contain different notice provisions
for ERISA-covered group health plans, nonfederal governmental plans,
and health insurance issuers in the individual market. ERISA-covered
group health plans are required to comply with the ERISA notice
regulations, whether insured or self-insured. Nonfederal governmental
plans and health insurance issuers in the individual market are
required to comply with the PHS Act notice regulations. Because there
are fundamental differences between the types of entities regulated
under ERISA as compared to the PHS Act, and in the structure of the two
acts, the notice requirements in the ERISA regulations and PHS Act
regulations differ.
Notice Requirements under ERISA. The interim final rules and these
final regulations require group health plans that are subject to ERISA
to comply with summary plan description (SPD) disclosure requirements
at 29 CFR 2520.102-3(u). The SPD rules generally require that
participants and beneficiaries in a group health plan be furnished an
SPD to apprise them of their rights and obligations. The rules also
prescribe the content of the SPD and the manner and timing 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.
In November 2000, the Department of Labor finalized the SPD content
regulation (65 FR 70241) requiring that all group health plans
(including insured plans not subject to the federal Newborns' Act)
provide language in the SPD that describes the federal or state law
requirements applicable to the plan or any health insurance coverage
offered under the plan relating to hospital lengths of stay in
connection with childbirth for the mother or newborn child. If federal
law applies in some areas in which the plan operates and state law
applies in other areas, the SPD should describe the different areas and
the federal or state law requirements applicable in each. Model
language for plans subject to the federal Newborns' Act's requirements
is included in the SPD content regulation. This change became
applicable as of the first day of the second plan year beginning on or
after January 22, 2001.
Some comments asked for clarification about whether the notice can
be provided through electronic media, as an alternative to traditional
paper disclosure. Under ERISA, the notice can be provided through
electronic media if the plan complies with ERISA's electronic
disclosure rules in 29 CFR 2520.104b-1.
Some comments requested that the rules require plans to provide
information to patients and providers regarding who has legal oversight
with respect to the Newborns' Act and who to contact in the event of a
violation. However, this concern is already addressed by current
regulation. Under 29 CFR 2520.102-3(t)(1) of the SPD content rules,
ERISA plans are required to provide a statement of ERISA rights in the
SPD. Among other things, this provision requires ERISA-covered plans to
provide information on the enforcement of a participant or
beneficiary's rights and who to contact if there are any questions
about the plan.
Notice Requirements under the PHS Act. Nonfederal governmental
plans. The Newborns' Act requires nonfederal governmental plans to
comply with the Newborns' Act notice requirements under section 711(d)
of ERISA as if section 711(d) applied to such plans.
The interim final rules and these final regulations require plans
that are subject to the federal Newborns' Act requirements to provide a
notice with specific language describing the federal requirements.
Under the interim final rules and these final regulations, if federal
law applies in some areas in which the plan operates and state law
applies in others, the plan must provide the appropriate notice to each
participant and beneficiary who is covered by federal law.
Several comments on the interim final rules objected that specific
language was required for the disclosure statement, and suggested that
the regulation instead should have provided guidelines for plans to
base their own language on (such as language that
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comports with the Department of Labor's sample language). However,
requiring specific language ensures the substantive adequacy of the
notices. Additionally, because many plans presumably have already
incorporated that mandatory language into their documents since the
effective date of the interim final rules, continuing to require that
language is the simplest approach.
As in the interim final rules, these final regulations require
nonfederal governmental plans to provide notice not later than 60 days
after the first day of the plan year following the effective date,
regardless of whether the plan had already provided notice under the
Department of Labor standards. This takes into account the fundamental
differences between the nonfederal governmental plans regulated under
the PHS Act and the types of entities regulated under ERISA. However,
with respect to the requirement that notice be provided within that 60-
day period, the final regulations include an exception for plans with
regard to participants and beneficiaries for whom the plan has already
provided notices in accordance with the interim final regulations that
are consistent with these final regulations (such as self-insured
nonfederal governmental plans that are subject to the federal Newborns'
Act requirements and that have already provided such notices).
Health insurance issuers in the individual market. The Newborns'
Act requires health insurance issuers in the individual market to
comply with the Newborns' Act notice requirements under section 711(d)
of ERISA as if section 711(d) applied to such issuers. Thus, the
interim final rules and these final regulations require individual
market health insurance issuers that provide benefits for hospital
lengths of stay in connection with childbirth to include, in the
insurance contract, a rider, or equivalent amendment to the contract,
specific language that notifies policyholders of their rights under the
Newborns' Act. The interim final rules and these final regulations also
require such issuers to provide this notice not later than a specific
time frame that is within a few months after the effective date of the
regulations.
Several comments on the interim final rules objected that specific
language was required for the disclosure statement and suggested
instead there should be guidelines for issuers to base their own
language on. However, requiring specific language ensures the
substantive adequacy of the notices. Additionally, because issuers
presumably have already incorporated that language into their documents
since the effective date of the interim final rules, continuing to
require that same language is the simplest approach.
These final regulations retain the notice exception in the interim
final rules for issuers that are subject only to state insurance law
requirements regarding hospital lengths of stay following childbirth.
Applicability in States
The statute and the interim final rules include an exception to the
Newborns' Act requirements for health insurance coverage in certain
states. Specifically, the Newborns' Act and the interim final rules do
not apply with respect to health insurance coverage if there is a state
law that meets any of the criteria \5\ that follow:
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\5\ HHS has the responsibility to enforce the federal Newborns'
Act with regard to issuers in states that do not have one of the
three types of state laws described in the Newborns' Act. As of the
publication of these final regulations, the only state in which HHS
is enforcing the Newborns' Act with respect to issuers is Wisconsin.
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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;
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
The state law requires that decisions regarding the
appropriate hospital length of stay in connection with childbirth be
left to the attending provider in consultation with the mother. The
interim final rules and these final regulations clarify that state laws
that require the decision to be made by the attending provider with the
consent of the mother satisfy this criterion.
Although this 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. Accordingly, self-insured plans in all states generally are
required to comply with the federal requirements (except those
nonfederal governmental plans that have opted out of the PHS Act
requirements).
These final regulations repeat the statute and the interim final
rules with one clarification. With respect to the second criterion
above (professional guidelines), the statute only addresses the period
following a vaginal delivery or a caesarean section. Accordingly,
although guidelines issued by professional medical associations such as
the American College of Obstetricians and Gynecologists (ACOG) cover a
spectrum of care both before and after childbirth, the only relevant
guidelines for this purpose are those pertaining to care following
childbirth. Therefore, the final rules include an express clarification
that State law need only require coverage in accordance with
professional guidelines that deal with care following childbirth.
Guidelines relating to other issues are not relevant for this purpose.
One comment to the interim final rules supported the criteria used
in those rules for determining whether the federal Newborns' Act
applies in a given state. However, another comment objected to the fact
that issuers in states that have enacted one of the three types of
state laws described in the federal Newborns' Act would arguably be
exempt from several of the federal Act's requirements, such as the
prohibitions on offering incentives to providers to induce them to
provide care in a manner inconsistent with the Act. This comment asked
us to reconsider whether the regulations should provide such a broad
exception from the federal Act's requirements in such states. The
statutory language does not require state law to include all the
federal provisions, such as the anti-incentive provisions, in order for
health insurance coverage in that state to be excepted from the federal
requirements. In light of this flexibility, these final regulations
retain the exception from the interim final rules.
Applicability Date
These final rules apply to group health plans, and health insurance
issuers offering group health insurance coverage, for plan years
beginning on or after January 1, 2009. The final 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, 2009. Until the applicability
date for this regulation, plans and issuers are required to continue to
comply with the corresponding sections of the regulations previously
published in the Federal Register (63 FR 57546) and other applicable
regulations.
[[Page 62414]]
III. Economic Impact and Paperwork Burden
Summary--Department of Labor and Department of Health and Human
Services
The Newborns' Act provisions generally prohibit group health plans
and group health insurance issuers from limiting hospital lengths of
stay in connection with childbirth to less than 48 hours for vaginal
deliveries and 96 hours for cesarean sections and from requiring a
health care practitioner to obtain preauthorization for such stays. For
insured coverage, the Newborns' Act allows any state law, meeting one
of three criteria, to take its place. The Departments have crafted
these regulations to secure the Act's protections in as economically
efficient a manner as possible, and believe that the economic benefits
of the regulations justify their costs.\6\
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\6\ The Newborns' Act still requires that insured plans disclose
a notice outlining participants' rights regarding hospital lengths
of stay related to childbirth. Nonetheless, final regulations
related to that notice were published separately (see 65 FR 70266,
Nov. 21, 2000) and so those costs are not included herein.
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The primary economic benefits associated with securing these
minimum lengths of stay derive from the reduction in complications
linked to premature discharge of mothers and newborns. Complications
that are easily treated and readily identifiable, like excessive
bleeding and infection in new mothers and dehydration and
hyperbilirubinemia in their newborns, are common causes for readmission
following a premature discharge. These complications and the subsequent
readmissions are expensive and cause avoidable suffering for mothers
and their newborns.
By eliminating the need to obtain preauthorization for affected
stays, the Act provides affected individuals with increased access to
the health care system. Increased access fosters timelier and fuller
medical care, better health outcomes, and improved quality of life.
This is especially true for certain individuals affected by the
Newborns' Act provisions. For example, lower-income individuals, when
denied coverage for the full length of stay, are more likely to forego
care for financial reasons. When adverse health outcomes result, costs
for the individual and the plan are high. For these individuals
especially, this requirement is more likely to mean receiving timely,
quality postnatal care, and living healthier lives.
Any mandate to increase the richness of health benefits, however,
adds to the cost of health coverage. Plans can mitigate costs by
increasing cost-sharing or by reducing non-mandated benefits. This in
turn shifts the economic burden of the regulation to plan participants,
and may induce some employers and employees, as well as those in the
individual insurance market, to drop coverage. The cost of enacting
federal minimum stay regulation is estimated to fall between $139 and
$279 million annually.\7\ However, as this constitutes a small fraction
of one percent of total health care expenditures, it would most likely
be a small, possibly negligible, factor in most employers' decisions to
offer health coverage and individuals' decisions to enroll.
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\7\ The vast majority of this cost is attributable to the impact
of the statute. ($14 million is the upper bound cost attributable to
the exercise of regulatory discretion.) Moreover, there are no
increased costs attributable to any new exercise of regulatory
discretion in the final rule. Instead, the final rule repeats the
interpretations of the interim final rule. Any increased costs over
the 1998 estimate in the interim final rules are attributable to
economic factors, such as increased cost of care (from 1996 to 2007
dollars), increased number of births, and increased number of
participants and beneficiaries covered by self-insured plans to
which the regulations apply.
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While the interim final regulations clarified several provisions
within the statute, this action serves primarily to provide the
certainty associated with a final rule for the regulated community, as
well as update the cost of the regulation, adjusting for changes in the
landscape of the community. Because these regulations are being
published several years after the Newborns' Act's passage and minimal
interpretation of the statutory language was required, the regulatory
implementation costs should be negligible. Costs of the final
regulation are detailed below in the section entitled ``Unified
Analysis of Costs and Benefits.'' Benefits of the regulation are also
discussed in that section at length, although because the benefits
primarily involve quality of life improvements, the Departments have
not attempted to quantify them. They do, however, believe them to be
sufficiently large so as to justify the cost of the regulation.
Executive Order 12866--Department of Labor and Department of Health and
Human Services
Under Executive Order 12866, the Departments must determine whether
a regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule (1) having an annual effect on the economy of $100 million or
more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined that this action is ``economically significant'' and is
subject to OMB review under Section 3(f) of the Executive Order.
Consistent with the Executive Order, the Departments have assessed the
costs and benefits of this action. The Departments' assessment, and the
analysis underlying the assessment, is detailed below. The Departments
performed a comprehensive, unified analysis to estimate the costs and
benefits attributable to the regulations for purposes of compliance
with Executive Order 12866, the Regulatory Flexibility Act, and the
Paperwork Reduction Act.
These final regulations are needed to provide certainty for the
affected community, as well as clarify the economic burden that the
Newborns' Act will place on health plans and their participants. The
Departments believe that this regulation's benefits will justify its
costs. This belief is grounded in the assessment of costs and benefits
that is summarized earlier and detailed below.
Regulatory Flexibility Act--Department of Labor and Department of
Health and Human Services
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and likely to have
a significant economic impact on a substantial number of small
entities. Unless an agency certifies that a final rule will not have a
significant economic impact on a substantial number of small entities,
section 604 of the RFA requires that the agency present a final
regulatory flexibility analysis (FRFA) at the time of the publication
of the notice of final rulemaking describing
[[Page 62415]]
the impact of the rule on small entities. Small entities include small
businesses, organizations, and governmental jurisdictions.
Because the 1998 rules were issued as interim final rules and not
as a notice of proposed rulemaking, the RFA did not apply and the
Departments were not required to either certify that the rule would not
have a significant impact on a substantial number of small entities or
conduct a regulatory flexibility analysis. The Departments nonetheless
crafted those regulations in careful consideration of effects on small
entities, and conducted an analysis of the likely impact of the rules
on small entities. This analysis was detailed in the preamble to the
interim final rule.
For purposes of this discussion, the Departments consider a small
entity to be an employee benefit plan with fewer than 100 participants.
Pursuant to the authority of section 104(a)(3) of ERISA, the Department
of Labor has previously issued at 29 CFR 2520.104-20, 2520.104-21,
2520.104-41, 2520.104-46 and 2520.104b-10, certain simplified reporting
provisions and limited exemptions from reporting and disclosure
requirements for small plans, including unfunded or insured welfare
plans covering fewer than 100 participants and which satisfy certain
other requirements.
Further, while some small plans are maintained by large employers,
most are maintained by small employers. Both small and large plans may
enlist small third party service providers to perform administrative
functions, but it is generally understood that third party service
providers shift their costs to their plan clients in the form of fees.
Thus, the Departments believe that assessing the impact of this final
rule on small plans is an appropriate substitute for evaluating the
effect on small entities. The definition of small entity considered
appropriate for this purpose differs, however, from a definition of
small business based on size standards promulgated by the Small
Business Administration (SBA) (13 CFR 121.201) pursuant to the Small
Business Act (5 U.S.C. 631 et seq.). The Department of Labor solicited
comments on the use of this standard for evaluating the impact of the
proposed regulations on small entities. No comments were received with
respect to this standard.
The Departments believe that the final regulation will not have a
significant economic impact on a substantial number of small entities.
The direct costs of restricting short stay policies is estimated to
fall between $15 million and $31 million for small plans which amount
to a per-participant cost of between nine and nineteen dollars for
those plans affected, or a small fraction of one percent of total small
plan expenditures.\8\
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\8\ Departments' estimates using the 2005 Medical Expenditures
Panel Survey Household Component (MEPS-HC), the 2006 Medical
Expenditures Panel Survey Insurance Component (MEPS-IC) and the
National Centers for Disease Control and Prevention (CDC) National
Hospital Discharge Survey: 2005 Annual Summary with Detailed
Diagnosis and Procedure Data determined that of participants
affected by the regulation, 11 percent were enrolled in small plans.
Costs born by small plans were 11 percent of all costs.
---------------------------------------------------------------------------
The Departments estimate that prior to the Act, 115,000 small plans
with 1.6 million participants would have restricted lengths of stay in
connection with childbirth or required preauthorization for such
stays.\9\ While this represents just 5 percent of all small plans, the
Departments believe it may represent a substantial number of small
entities.
---------------------------------------------------------------------------
\9\ Estimates are based on the 2006 MEPS-IC. It should be noted,
however, that the Pregnancy Discrimination Act of 1978 allows firms
with less than 15 employees that offer health insurance to exclude
maternity care. The 2000 Mercer/Foster Higgins National Survey of
Employer Sponsored Health Plans found that 7 percent of firms with
10-24 employees did not offer such benefits, but the survey did not
examine smaller firms. Rough estimates by the Departments suggest
that the share of firms with 9 or fewer employees that offer health
benefits but exclude maternity benefits is 21 percent. As the cost
of these benefits rises, this share is likely to increase which,
while having a small effect on the number of participants affected
by the regulation, might significantly decrease the number of small
plans affected by the regulation.
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Paperwork Reduction Act--Department of Labor and Department of Health
and Human Services
1. Department of Labor
These 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 Department of
Labor reported the information collection burdens associated with the
Newborns' Act 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 the information collection under OMB
Control Number 1210-0039, expiring on March 31, 2010.
2. Department of Health and Human Services
These 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). HHS reported the
information collection burdens associated with the Newborns' Act in the
interim rules (Information Collection Requirements Referenced in HIPAA
for the Group Market, Supporting Regulations 45 CFR 146), published in
the Federal Register on April 8, 1997. These collection requirements
were approved under OMB Control Number 0938-0702, expiring on August
31, 2009.
Special Analyses--Department of the Treasury
Notwithstanding the determinations of the Departments of Labor and
of Health and Human Services, for purposes of the Department of the
Treasury it has been determined that this Treasury decision is not a
significant regulatory action. Therefore, a regulatory assessment is
not required. It has also been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these Treasury regulations, and, because these regulations do not
impose a collection of information on small entities, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preceding these regulations was
submitted to the Small Business Administration for comment on its
impact on small business.
Congressional Review Act
These regulations are subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and have been transmitted to Congress and
the Comptroller General for review. These regulations, however, are
considered a ``major rule,'' as that term is defined in 5 U.S.C. 804,
because they are likely to result in an annual effect on the economy of
$100 million or more.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, these regulations do not
include any federal mandate that may result in expenditures by state,
local, or tribal governments,\10\ however, they include mandates which
may impose an annual burden of $100 million or more on the private
sector, updated annually for inflation. After applying the most
[[Page 62416]]
current gross domestic product implicit price deflator in 2008, that
threshold is approximately $130 million.
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\10\ Nonfederal governmental plans can opt-out of these
requirements and it was assumed that those States that had rules in
place that supplanted the Newborns' Act (that is, all States except
one) would.
---------------------------------------------------------------------------
Federalism Statement Under Executive Order 13132--Department of Labor
and Department of Health and Human Services
Executive Order 13132 outlines fundamental principles of
federalism. It requires adherence to specific criteria by federal
agencies in formulating and implementing policies that have
``substantial direct effects'' on the States, the relationship between
the national government and States, or on the distribution of power and
responsibilities among the various levels of government. Federal
agencies promulgating regulations that have these federalism
implications must consult with State and local officials, and describe
the extent of their consultation and the nature of the concerns of
State and local officials in the preamble to the regulation.
In the Departments' view, these final regulations have federalism
implications because they may have substantial direct effects on the
States, the relationship between the national government and States, or
on the distribution of power and responsibilities among the various
levels of government. However, in the Departments' view, the federalism
implications of these final regulations are substantially mitigated
because, with respect to health insurance issuers, all but one of the
States have requirements that prescribe benefits for hospital lengths
of stay in connection with childbirth that satisfy the Newborns' Act
hospital length of stay requirements.
In general, through section 514, ERISA supersedes State laws to the
extent that they relate to any covered employee benefit plan, but
preserves State laws that regulate insurance. At the same time,
however, ERISA prohibits States from regulating a plan as an insurance
company. HIPAA added a new section to ERISA (as well as to the PHS Act
and the Code) narrowly preempting State requirements for issuers of
group health insurance coverage.\11\ HIPAA's conference report states
that the conferees intended only the narrowest preemption of State laws
with regard to health insurance issuers. H.R. Conf. Rep. No. 736, 104th
Cong. 2d Session 205 (1996).
---------------------------------------------------------------------------
\11\ The Newborns' Act was incorporated into the administrative
framework established by HIPAA.
---------------------------------------------------------------------------
The Newborns' Act also added a new section to ERISA (and to the PHS
Act and the Code) which provides that the federal requirements
applicable to group health plans and health insurance issuers
concerning hospital lengths of stay for mothers and newborns following
childbirth do not apply if State law meets one or more of three
specific criteria in the statute.\12\ The accompanying conference
report states that it is the intent of the conferees that States may
impose more favorable requirements for the treatment of maternity
coverage under health insurance coverage than required by the Newborns'
Act. H.R. Conf. Rep. No. 104-812, 104th Cong. 2d Session 88 (1996).
---------------------------------------------------------------------------
\12\ The federal requirements concerning hospital lengths of
stay in connection with childbirth do not apply with respect to
health insurance coverage if state law requires (1) 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) 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) 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.
---------------------------------------------------------------------------
Guidance conveying the Newborns' Act hospital length of stay
requirements was published in the Federal Register on October 27, 1998
(63 FR 57546). These final regulations clarify and implement the
statute's minimum standards and do not significantly reduce the
discretion given the States by the statute. Moreover, the Departments
understand that all but one State have requirements that prescribe
benefits for hospital lengths of stay in connection with childbirth
that satisfy the Newborns' Act requirements.
The Newborns' Act modified HIPAA's framework to provide that the
States have primary responsibility for enforcement of the provisions of
the Newborns' Act as they pertain to issuers, but that the Secretary of
Health and Human Services must enforce any provision that a State fails
to substantially enforce. To date, CMS enforces the Newborns' Act
hospital length of stay requirements in only one State. When exercising
its responsibility to enforce the Newborns' Act provisions, CMS works
cooperatively with the State for the purpose of addressing the State's
concerns and avoiding conflicts with the exercise of State authority.
CMS has developed procedures to implement its enforcement
responsibilities, and to afford the States the maximum opportunity to
enforce the Newborns' Act requirements in the first instance. CMS
procedures address the handling of reports that States may not be
enforcing the Newborns' Act requirements, and the mechanism for
allocating responsibility between the States and CMS. In compliance
with Executive Order 13132's requirement that agencies examine closely
any policies that may have federalism implications or limit the
policymaking discretion of the States, the Department of Labor and CMS
have consulted and worked cooperatively with affected State and local
officials.
For example, the Departments sought and received input from State
insurance regulators and the National Association of Insurance
Commissioners (NAIC). The NAIC is a non-profit corporation established
by the insurance commissioners of the 50 States, the District of
Columbia, and the four U.S. territories. In most States the insurance
commissioner is appointed by the governor; in approximately 14 States,
the insurance commissioner is an elected official. Among other
activities, it provides a forum for the development of uniform policy
when uniformity is appropriate. Its members meet, discuss and offer
solutions to mutual problems. The NAIC sponsors quarterly meetings to
provide a forum for the exchange of ideas and in-depth consideration of
insurance issues by regulators, industry representatives and consumers.
CMS and Department of Labor staff have consistently attended these
quarterly meetings to listen to the views of the State insurance
departments.
In addition, the Departments informally consulted with the NAIC in
developing the interim final regulations. Through the NAIC, the
Departments sought and received the input of State insurance
departments regarding preemption of State laws, applicability of the
Newborns' Act provisions, and certain insurance industry definitions
(e.g., attending provider). In general, these final regulations do not
change the interim final rules. Significantly, the Departments received
only eleven formal comment letters on the interim final regulation,
none of which were from or on behalf of the NAIC or any of the States.
The Departments have also cooperated with the States in several
ongoing outreach initiatives, through which information is shared among
federal regulators, State regulators and the regulated community. In
particular, the Department of Labor has established a Health Benefits
Education Campaign with more than 70 partners, including CMS, NAIC and
many business and consumer groups. CMS has sponsored conferences with
the States--the Consumer Outreach and Advocacy
[[Page 62417]]
conferences in March 1999 and June 2000, and the Implementation and
Enforcement of HIPAA National State-Federal Conferences in August 1999,
2000, 2001, 2002, and 2003. Furthermore, both the Department of Labor
and CMS Web sites offer links to important State Web sites and other
resources, facilitating coordination between the State and federal
regulators and the regulated community.
Throughout the process of developing these regulations, to the
extent feasible within the specific preemption provisions of HIPAA and
the Newborns' Act, the Departments have attempted to balance the
States' interests in regulating health insurance issuers, and Congress'
intent to provide uniform minimum protections to consumers in every
State. By doing so, it is the Departments' view that they have complied
with the requirements of Executive Order 13132.
Pursuant to the requirements set forth in Section 8(a) of Executive
Order 13132, and by the signatures affixed to these final regulations,
the Departments certify that the Employee Benefits Security
Administration and the Centers for Medicare & Medicaid Services have
complied with the requirements of Executive Order 13132 for the
attached Final Regulations for Group Health Plans and Health Insurance
Issuers Under the Newborns' and Mothers' Health Protection Act (RIN
1210-AA63 and RIN 0938-AI17), in a meaningful and timely manner.
Unified Analysis of Costs and Benefits
1. Introduction
The Newborns' Act's provisions generally prohibit group health
plans and health insurance issuers from: (1) Limiting hospital lengths
of stay in connection with childbirth to less than 48 hours for vaginal
deliveries and 96 hours for cesarean sections, and (2) requiring
preauthorization for the 48/96 hour stays. The primary effect and
intent of the provision is to reduce postpartum complications
associated with premature discharge.
These regulations draw on the Departments' authority to clarify and
interpret the Newborns' Act's statutory provisions in order to secure
the protections intended by Congress for newborns and mothers. The
Departments crafted them to satisfy this mandate in as economically
efficient a manner as possible, and believe that the economic benefits
of the regulations justify their costs. This conclusion takes into
account both the effect of the statute and the impact of the discretion
exercised in the regulations.
This regulation is needed to clarify and interpret the Newborns'
Act provisions under section 711 of ERISA, sections 2704 and 2751 of
the PHS Act, and section 9811 of the Internal Revenue Code and to
ensure that group health plans and health insurance issuers subject to
these rules do not impermissibly restrict benefits or require
preauthorization for 48-hour or 96-hour hospital lengths of stay in
connection with childbirth.
2. Costs and Benefits of the Statute
The Departments provide qualitative assessments of the nature of
the costs and benefits that are expected to derive from the statutory
provisions of the Newborns' Act. In addition, the Departments provide
summaries of any credible, empirical estimates of these effects that
are available.
In order to determine how many plan participants could benefit from
the Newborns' Act provision, the Departments considered the estimated
2.8 million births in 2005 by women with private health insurance.\13\
Of these, approximately 55.0 percent are assumed to be normal, healthy
deliveries, and therefore eligible for early discharge.\14\ Because
legislation has been passed in every state but Wisconsin, the
Departments limited their analysis to participants in self-insured
group health plans throughout the country and all health plans within
Wisconsin. Finally, because Health Maintenance Organizations (HMOs)
have traditionally had more aggressive short-stay policies, the share
of workers enrolled in HMOs versus commercial plans was taken into
account as were the share of those plans with short-stay policies.\15\
---------------------------------------------------------------------------
\13\ Departments' estimate based on the 2005 MEPS-HC and the
2005 CDC Survey.
\14\ The CDC reported that of the 4.0 million births in 2005,
2.2 million, or 55.0 percent of those newborns were categorized as
without any illness or risk-related diagnosis (e.g. jaundice,
respiratory distress, disorders relating to short gestation and low
birth weight). No data are available on whether health of newborns
varies by mothers' insurance status, although insured mothers are
more likely to receive prenatal care and this would be expected to
positively affect the share of ``healthy'' births (see Susan Egerter
et al., ``Timing of Insurance Coverage and Use of Prenatal Care
Among Low-Income Women,'' American Journal of Public Health, v.
92(3): 423-427).
\15\ Julie A. Gazmararian & Jeffrey Koplan found in, ``Length-
of-Stay After Delivery: Managed Care versus Fee for Service,''
Health Affairs, v. 15(4): 74-80, that 35.9 percent of enrollees in
commercial plans were discharged within one day after delivery
compared to 57.7 percent from commercial HMOs. The shares of
individuals enrolled in HMOs at self-insured and fully-insured plans
were taken from the 2007 Kaiser Family Foundation's Survey of
Employer Sponsored Insurance.
---------------------------------------------------------------------------
Based on these assumptions, approximately 328,000 births or roughly
22 percent of healthy births by privately insured women would be
affected by the provision.\16\ If each woman then stayed the maximum
period outlined in the statute, approximately 348,000 additional days
of hospital care would be required.\17\ Assuming hospitals charge $800
per day for postpartum care, the annual cost of the provision would be
$279 million: $1.7 million of which would be attributable to the
individual market in Wisconsin; the remaining $276.9 million would be
attributable to the group market in Wisconsin and self-funded plans
throughout the country. However, because the statute does not require a
48- or 96-hour stay, but instead gives the decision-making authority to
the attending physician in consultation with the mother, it is expected
that not all of these births will result in additional hospital time.
If only one-half of affected mothers had their stays extended by the
full amount, the annual cost of the provision would be $139 million,
less than $1 million of which would be attributable to the individual
market of Wisconsin.\18\
---------------------------------------------------------------------------
\16\ The number of women age 10-54 with private insurance was
estimated using the 2005 MEPS-HC. Fertility rates for different age
brackets were taken from the 2005 CDC National Hospital Discharge
Survey and were interacted with the number of privately insured
women to ascertain the number of births by insured women. This was
then interacted with the share of infants that were born healthy, as
reported in the 2005 CDC report, to determine the number of healthy
births to privately-insured women.
To restrict the number of privately insured women having healthy
births to those with ESI, the share of all privately insured women,
age 10-54, that had ESI was taken from the 2007 March CPS and
interacted with the above number. To then discern the number of
births that would be covered by the regulation, the 2006 MEPS-IC was
used to ascertain the share of employees in ESI that were in self-
insured plans that had maternal coverage. This number was further
interacted by the share of employees in the share of those employees
in HMO versus non-HMO health plans as provided by the 2007 Kaiser
Family Foundation's Employer Health Benefits Survey.
Interacting all of these numbers results in the 328,000 number
cited in the text.
\17\ Based on 1995 discharge rates, approximately 94 percent of
the 328,000 births required one additional day to meet the maximum
period outlined by the statute; 6 percent required two additional
days.
\18\ The Congressional Budget Office (CBO) analyzed Senate
proposal S. 969, which was an earlier version of the Newborns' Act.
CBO estimated 900,000 insured births had stays shorter than the
minimum specified in the bill, which would result in 400,000
additional inpatient days and an additional 200,000 additional out-
patient visits at an annual cost of $360 million in 2007 dollars (or
$800 for each additional day of inpatient care; $200 for outpatient
care). The Departments' estimate is significantly less, primarily
due to: (1) A large number of states either clarifying existing
policies for short-stay deliveries or enacting new ones which
supersede the federal statute for all but self-insured plans; and
(2) the CBO estimates included costs for follow-up visits, a
requirement that was dropped from the federal statute.
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[[Page 62418]]
While the Departments estimate that the cost of the NMHPA is as
much as $279 million annually, health plans are estimated to have spent
more than $775 billion in 2007 to cover approximately 201.7 million
privately insured individuals.\19\ Therefore, the upper estimate of the
costs under the Newborns' Act's provisions represent a very small
fraction of one percent of total health plan expenditures.
---------------------------------------------------------------------------
\19\ The Departments' estimate is based on the Office of the
Actuary at the Centers for Medicare & Medicaid Services (CMS)
projected measure of total personal health expenditures by private
health insurance in 2007.
---------------------------------------------------------------------------
Moreover, the cost of this provision is likely to decline in the
future, despite increases in overall health care spending. Since the
statute was passed, there has been a significant increase in the number
of cesarean births, compared to vaginal births. While traditionally
cesarean births are associated with higher risk, an increasing number
of women are now electing to have the procedure.\20\ Women who elect to
have a cesarean would presumably have a lower risk than those for whom
the procedure is required and therefore may not require the prescribed
96-hour recovery period detailed in the statute.\21\ If this trend
continues, the burden of this statute should lessen.
---------------------------------------------------------------------------
\20\ The share of all births that are cesarean rose from 20.7
percent in 1996 to an estimated 31.3 percent in 2005 (CDC (2005).
``National Hospital Discharge Survey'' Vital and Health Statistics,
Series 13 (162)). A study by Health Grades Inc. found a 36.6 percent
increase in the number of ``patient choice'' cesarean sections
between 2001 and 2003.
\21\ Most research comparing complication rates of cesarean to
vaginal births focus on those women who previously had a cesarean
section, as insufficient data are available to compare initial
vaginal versus initial elected cesarean deliveries. As such, it is
difficult to discern how the medically advisable stay of an elected
cesarean section compares to that of an uncomplicated vaginal birth.
However, there is much agreement that emergency cesarean sections,
which typically follow a lengthy labor, are far more dangerous to
mother and child than the elected variety. Given the Newborns' Act's
prescribed 96-hour stays for cesarean births when elected cesareans
comprised a smaller share of all cesareans, it would be reasonable
to expect that the stays for elected cesareans may fall over time.
---------------------------------------------------------------------------
The primary statutory economic benefits associated with the
Newborns' Act's provisions derive from an increase in access to health
plan coverage for postpartum care and monitoring of mothers and their
newborns. Individuals without coverage for this care and monitoring are
less likely to remain in the hospital for fear of incurring expenses
that must be paid for `out-of-pocket.' Lower-income individuals are
more likely to forego care not covered by their insurance. Foregoing
this care and monitoring increases the risk of adverse health outcomes,
which in turn generates higher medical costs. Much of these costs may
be shifted to public funding sources (and therefore to taxpayers) or to
other payers.\22\
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\22\ For more information on health choices of lower-income
individuals, see: Trude, Sally (2003). ``Patient Cost Sharing: How
Much is Too Much,'' Health System Change Issue Brief, no. 72
(December).
---------------------------------------------------------------------------
Foregoing appropriate care can also negatively affect the quality
of life. Improved access to health coverage for mothers and newborns
will lead to more appropriate medical care and monitoring, better
health outcomes, and improved quality of life.\23\ Denied coverage,
individuals must choose whether to pay for the extra day(s) in the
hospital and potentially suffer economic hardship or forego the care
and monitoring, creating a risk of an adverse health outcome. Gaining
coverage will sometimes mean receiving high quality care and living
healthier lives.\24\
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\23\ For more detailed information, see: O'Brien, Ellen (2003).
``Employer Benefits from Workers' Health Insurance,'' Milbank
Quarterly, Vol. 1 No. 1. O'Brien provides an extensive analysis of
the literature on benefits accruing to employers from offering
health benefits and the costs to employers of unhealthy employees,
as well as information on studies demonstrating that poor health may
be related to lower productivity. In particular, she discusses
studies that have examined the effects on workplace productivity of
specific health conditions and shows that poor health reduces
workers' productivity at work, and that effective health care
treatments can reduce productivity losses and may even pay for
themselves in terms of increased productivity.
\24\ Research on the benefits of longer stays has been somewhat
mixed. Some studies show short-stays to be correlated with decreased
follow-up care and increased re-hospitalization, particularly for
low-income families, which will ultimately increase societal costs
(for further discussion, see: Galbraith, Alison A. et al. (2003)
``Newborn Early Discharge Revisited: Are California Newborns
Receiving Recommended Postnatal Services?'' Pediatrics, vol. 111
(2): p. 364-371; Lock, Michael & Joel G. Ray. (1999) ``Higher
Neonatal Morbidity after Routine Hospital Discharge: Are We Sending
Newborns Home Too Early?'' Canadian Medical Association Journal,
vol. 161 (3): p. 249-253; Malkin, Jesse D. et al. (2003)
``Postpartum Length of Stay and Newborn Health: A Cost-Effectiveness
Analysis,'' Pediatrics, vol. 111 (4): p. 316-322).
Since the statutes have been in place, other studies have argued
that higher re-hospitalization rates found in short-stay newborns
are due to more frequent post-stay evaluations in the four days
following birth, considered the critical window for ascertaining
newborn health, as mandated in health plans. Once new regulations
were passed extending stays, health plans reduced their follow-up
care policies and newborns were less likely to be examined in the
days following discharge. This could result in an increase in costs.
(For further discussion, see: Hyman, David A. (2001) ``What Lessons
Should We Learn from Drive-Through Deliveries?'' Pediatrics, vol.
107 (2): 406-408; Madden, Jeanne M. et al. (2002) ``Effects of a Law
Against Early Postpartum Discharges on Newborn Follow-up, Adverse
Events, and HMO Expenditures,'' New England Journal of Medicine,
vol. 347 (25): p. 2031-2038; Madden, Jeanne M. et al. (2004)
``Length-of-Stay Policies and Ascertainment of Postdischarge
Problems in Newborns,'' Pediatrics, vol. 113 (1): p. 42-49.)
The Departments believe, however, that because most of the
complications of newborns manifest themselves within the immediate
48 hours following birth, special protection much be given to that
period. Moreover, since the decision to discharge the patients will
be made by the doctor, in consultation with the mother, many of the
concerns posed by those who oppose extended stays will be factored
into that decision. As such, the Departments believe that the
Newborns' Act will improve the health and welfare of mothers and
newborns.
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The provisions of the Newborns' Act and its regulation generally
apply to both group health plans and health insurance issuers. While
the costs of the Newborns' Act are substantial, economic theory
predicts that issuers will pass their costs of compliance back to
plans, and that plans may shift some or all of issuers' and their own
costs of compliance to participants either through increases in
premiums, increased cost-sharing, or reducing the richness of non-
mandated health benefits.\25\
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\25\ The voluntary nature of the employment-based health benefit
system in conjunction with the open and dynamic character of labor
markets make explicit as well as implicit negotiations on
compensation a key determinant of the prevalence of employee
benefits coverage. It is likely that 80% to 100% of the cost of
employee benefits is borne by workers through reduced wages (See for
example: Jonathan Gruber and Alan B. Krueger, ``The Incidence of
Mandated Employer-Provided Insurance: Lessons from Workers
Compensation Insurance,'' Tax Policy and Economy (1991); Jonathan
Gruber, ``The Incidence of Mandated Maternity Benefits,'' American
Economic Review, Vol. 84 (June 1994), pp. 622-641; Lawrence H.
Summers, ``Some Simple Economics of Mandated Benefits,'' American
Economic Review, Vol. 79, No. 2 (May 1989); Louise Sheiner, ``Health
Care Costs, Wages, and Aging,'' Federal Reserve Board of Governors
working paper, April 1999; and Edward Montgomery, Kathryn Shaw, and
Mary Ellen Benedict, ``Pensions and Wages: An Hedonic Price Theory
Approach,'' International Economic Review, Vol. 33, No. 1, Feb.
1992). The prevalence of benefits is therefore largely dependent on
the efficacy of this exchange. If workers perceive that there is the
potential for inappropriate denial of benefits they will discount
their value to adjust for this risk. This discount drives a wedge in
the compensation negotiation, limiting its efficiency. With workers
unwilling to bear the full cost of the benefit, fewer benefits will
be provided. The extent to which workers perceive a federal
regulation supported by enforcement authority to improve the
security and quality of benefits, the differential between the
employers' costs and workers' willingness to accept wage offsets is
minimized.
---------------------------------------------------------------------------
While 74 million individuals are enrolled in group or private
health plans, only 15 million individuals are enrolled in plans that
had policies affected by the Newborns' Act. Of these, only 328,000
individuals are expected to be annually directly impacted and receive
additional coverage they were previously denied or restricted for 48 or
[[Page 62419]]
96-hour hospital stays following childbirth. Though these benefits are
received by a small number of plan enrollees, the costs are distributed
broadly among all plan participants. As a result, the cost of the
Newborns' Act per individual enrollee is expected to be minimal--
between 9 and 19 dollars per person for those enrolled in affected
plans.\26\ While it is possible that some enrollees on the margin will
decline coverage in response to cost increases, the number of those
acting in such a manner is expected to be negligible. As such, the
benefits of this statute are believed to justify its costs.
---------------------------------------------------------------------------
\26\ The total cost of the regulation was calculated by
estimating the number of additional days in the hospital that short-
stay deliveries would require under the statute. This number was
then multiplied by $800, to reflect the per day hospitalization cost
of a mother (this was a CBO number indexed to 2007 dollars). Having
calculated the total cost of the regulation at $279 million (and a
lower bound of $139 million), these numbers were then divided by the
number of participants in affected health plans (a total of 15
million) to get an upper ($19) and lower bound ($9) of the per-
participant cost of the regulation.
---------------------------------------------------------------------------
3. Costs and Benefits of the Rules Applicable to the Newborns' Act
The interim final rule clarified when a stay begins under the
Newborns' Act. Prior to this, private health plans could use the
expectant mother's admittance time to determine the required stay, an
assumption that consistently reduced the number of women experiencing
stays less than those prescribed by the statute by 5 percent.\27\ By
clarifying this assumption in the interim final rule, the number of
stays that would have been shorter than 48/96 hours increased by
approximately 16,000 for all plans, and by approximately 2,000 for
small plans. This in turn raised the direct costs to health plans by 5
percent (from $265 to $279 million for the upper bound for all plans
and from $29 to $31 million for small plans). However, because it can
take several hours for certain conditions to present themselves, such
as jaundice and dehydration, the additional hours of hospital
supervision--gained by generally not using an expectant mother's
admittance time as the start of a stay--can be critical. Therefore, the
benefits of this clarification should justify this additional cost.
---------------------------------------------------------------------------
\27\ Departments' estimate based on the CDC's 2005 Survey,
Tables 37 and 42. The Departments looked at the share of stays that
would be labeled ``short'' for both mothers and newborns in 1995
(before any part of the statute was enforced) and found that the
share of newborns with a ``short stay'' was 5 percent higher. It was
therefore assumed that starting the clock at the birth of a child
would increase the number of ``short stays'' by 5 percent.
---------------------------------------------------------------------------
The regulation also defines that for births occurring outside of a
hospital, stays begin once the mother or newborn is admitted as a
hospital inpatient in connection with childbirth, as defined by the
attending provider. The Departments lack any firm basis for quantifying
the number of individuals likely to be affected by this provision, and
therefore are unable to quantify the increase in costs and benefits.
However, given the special and narrow circumstances to which this
provision applies, costs and benefits are expected to be small.
Statutory Authority
The Department of the Treasury final rule is adopted pursuant to
the authority contained in sections 7805 and 9833 of the Code (26
U.S.C. 7805, 9833).
The Department of Labor final rule is adopted pursuant to the
authority contained in 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169,
1181-1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and
1191c, sec. 101(g), Public Law 104-191, 110 Stat. 1936; sec. 401(b),
Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); Secretary of
Labor's Order 1-2003, 68 FR 5374 (Feb. 3, 2003).
The Department of Heath and Human Services 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 amended by Public Law 104-191, 110 Stat. 1936,
Public Law 104-204, 110 Stat. 2935 and Public Law 105-277, 112 Stat.
2681-436.
Accounting Statement
In accordance with OMB Circular A-4 (available at http://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in the table below, we
have prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this final rule. This
table provides our best estimate for the annual costs associated with
enacting the federal minimum stay final regulation.
Accounting Statement: Classification of Estimated Expenditures, CY2008
[In millions]
------------------------------------------------------------------------
Cost estimates
Category -------------------------
Low High
------------------------------------------------------------------------
Annualized Monetized Costs................... $139.30 $278.50
------------------------------------------------------------------------
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
45 CFR Part 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
0
Accordingly, 26 CFR Part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
0
Paragraph 1. The authority citation for part 54 is amended by adding an
entry for Sec. 54.9811-1 in numerical order and by removing the entry
for Sec. 54.9811-1T to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
Section 54.9811-1 also issued under 26 U.S.C. 9833. * * *
Sec. 54.9801-1 [Amended]
0
Par. 2. Section 54.9801-1(a) is amended by removing the language
``54.9811-1T'' and adding ``54.9811-1'' in its place.
[[Page 62420]]
Sec. 54.9801-2 [Amended]
0
Par. 3. In Sec. 54.9801-2, the introductory paragraph before the
definitions is amended by removing the language ``54.9811-1T'' and
adding ``54.9811-1'' in its place.
0
Par. 4. Section 54.9811-1 is added to read as follows:
Sec. 54.9811-1 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 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 specified in 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) Facts. 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) Conclusion. 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. Therefore, a plan, hospital, managed care organization,
or other issuer is not an attending provider.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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.
[[Page 62421]]
(ii) Conclusion. 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
specified in 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) Facts. 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) Conclusion. 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, the requirement to obtain precertification from the
plan based on medical necessity for a hospital length of stay within
the 96-hour period 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 specified in 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) for rules relating
to a disclosure requirement imposed under section 711(d) of ERISA (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 that relate to care
following childbirth 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 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
[[Page 62422]]
with childbirth other than through health insurance coverage.
(3) Preemption provisions under section 731(a) of ERISA. See 29 CFR
2590.711(e)(3) for a rule providing that the preemption provisions
contained in section 731(a)(1) of ERISA and 29 CFR 2590.731(a) do not
supersede a state law if the state law is described in paragraph (e)(1)
of 29 CFR 2590.711 (which is substantially similar to paragraph (e)(1)
of this section).
(4) Examples. The rules of this paragraph (e) are illustrated by
the following examples:
Example 1. (i) Facts. 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) Conclusion. 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) Facts. 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 and
pediatric care in accordance with guidelines that relate to care
following childbirth established by the American College of
Obstetricians and Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. 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/applicability date. This section applies to group
health plans for plan years beginning on or after January 1, 2009.
Sec. 54.9811-1T [Removed]
0
Par. 5. Section 54.9811-1T is removed.
Sec. 54.9831-1 [Amended]
0
Par. 6. Section 54.9831-1(b) is amended by removing the language
``54.9811-1T'' and adding ``54.9811-1'' in its place.
Approved: September 23, 2008.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
Employee Benefits Security Administration
29 CFR Chapter XXV
0
For the reasons set forth above, 29 CFR Part 2590 is amended as
follows:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
1. The authority citation for Part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c,
sec. 101(g), Public Law 104-191, 110 Stat. 1936; sec. 401(b), Public
Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); Secretary of
Labor's Order 1-2003, 68 FR 5374 (Feb. 3, 2003).
0
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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 is
prohibited from requiring that a physician or other health care
provider obtain authorization from the plan or issuer for prescribing
the hospital length of stay specified in 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) Facts. 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) Conclusion. 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
[[Page 62423]]
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. Therefore, a plan, hospital, managed care organization,
or other issuer is not an attending provider.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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
specified in 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) Facts. 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) Conclusion. 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, the requirement to obtain precertification from the
plan based on medical necessity for a hospital length of stay within
the 96-hour period 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 specified in 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) Facts. 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
[[Page 62424]]
coinsurance paid by the patient increases from 20 percent to 50
percent after 24 hours.
(ii) Conclusion. 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) Facts. 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) Conclusion. 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) (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
cesarean section.
(ii) The state law requires the coverage to provide for maternity
and pediatric care in accordance with guidelines that relate to care
following childbirth 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) Facts. 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) Conclusion. 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) Facts. 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 and
pediatric care in accordance with guidelines that relate to care
following childbirth established by the American College of
Obstetricians and Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. 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) Applicability date. 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, 2009.
Signed at Washington, DC this 2nd day of October, 2008.
Bradford P. Campbell,
Assistant Secretary, Employee Benefits Security Administration, U.S.
Department of Labor.
Adoption of Amendments to the Regulations
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR SUBTITLE A, SUBCHAPTER B
0
45 CFR subtitle A, subchapter B, is amended as set forth below:
PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET
0
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).
0
2. Section 146.130 is revised 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 (2) of this
section are illustrated by the following examples. In
[[Page 62425]]
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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 is
prohibited from requiring that a physician or other health care
provider obtain authorization from the plan or issuer for prescribing
the hospital length of stay specified in 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) Facts. 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) Conclusion. 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. Therefore, a plan, hospital, managed care organization,
or other issuer is not an attending provider.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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
specified in 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) Facts. 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) Conclusion. 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
[[Page 62426]]
the first 96 hours.) In addition, the requirement to obtain
precertification from the plan based on medical necessity for a
hospital length of stay within the 96-hour period 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 specified in 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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. 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, or that
notifies participants and beneficiaries of plan benefit changes, 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, 2009. Each time a plan
distributes one or both of the documents described in paragraph (d)(1)
to participants and beneficiaries after providing this initial notice,
the disclosure notice in paragraph (d)(2) must appear in at least one
of those documents.
(4) Exceptions. The requirements of this paragraph (d) do not apply
in the following situations.
(i) Self-insured plans that have already provided notice. If
benefits for hospital lengths of stay in connection with childbirth are
not provided through health insurance coverage, and the group health
plan has already provided an initial notice that complies with
paragraphs (d)(1) and (d)(2) of this section, the group health plan is
not automatically required to provide another such notice to
participants and beneficiaries who have been provided with the initial
notice. However, following the effective date of these regulations,
whenever such a plan provides one or both of the documents described in
paragraph (d)(1) of this section to participants and beneficiaries, the
disclosure notice in paragraph (d)(2) of this section must appear in at
least one of those documents.
(ii) Self-insured plans that have elected exemption from this
section. If 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, the group health
plan is not subject to this paragraph (d).
[[Page 62427]]
(iii) Insured plans. If 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, the group health plan is not subject to
this paragraph (d).
(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 that relate to care
following childbirth 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) Facts. 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) Conclusion. 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) Facts. 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 and
pediatric care in accordance with guidelines that relate to care
following childbirth established by the American College of
Obstetricians and Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. 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) Applicability 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, 2009.
PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET
0
3. 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).
0
4. Section 148.170 is revised to read as follows:
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 (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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 is
prohibited from requiring that a physician or other health care
provider obtain authorization from the issuer for
[[Page 62428]]
prescribing the hospital length of stay specified in 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) Facts. 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) Conclusion. 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. Therefore, an issuer, plan, hospital, or managed care
organization is not an attending provider.
(iv) Example. The rules of this paragraph (a)(5) are illustrated by
the following example:
Example. (i) Facts. 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) Conclusion. 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 subject to the requirements of this section 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 following examples. In each example, the issuer is subject to
the requirements of this section, as follows:
Example 1. (i) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 specified in
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) Facts. 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) Conclusion. 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, the requirement to obtain precertification from the
issuer based on medical necessity for a hospital length of stay
within the 96-hour period 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
[[Page 62429]]
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 specified in 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) Facts. 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) Conclusion. 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) Facts. 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) Conclusion. 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 (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 requirements 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 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) no later than December 19, 2008.
To the extent an issuer has already provided the disclosure notice
in paragraph (d)(2) of this section to covered individuals, it need not
provide another such notice by December 19, 2008.
(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 that relate to care
following childbirth 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) Applicability 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, 2009.
Dated: May 11, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare & Medicaid Services.
Dated: October 30, 2007.
Michael O. Leavitt,
Secretary, Department of Health and Human Services.
Editorial Note: This document was received in the Office of the
Federal Register on October 14, 2008.
[FR Doc. E8-24666 Filed 10-17-08; 8:45 am]