On February 1, the Departments of Health and Human Services, Labor, and Treasury released a proposed rule implementing Affordable Care Act (ACA) requirements for religious organizations objecting to the provision of preventative health services.  Although ACA requires coverage for certain preventive health services – including certain contraceptive services – without cost sharing in non-exempt, non-grandfathered group health plans and health insurance coverage, the proposed rule outlines exemptions for religious organizations.

The proposed rule makes two significant changes to the preventive services coverage rules.  According to the Departments, the changes are “designed to enhance coverage of important preventive services for women without cost sharing while accommodating the religious objections to contraceptive coverage of eligible organizations.” The two changes:

1. Amend the criteria for the religious employer exemption.  This amendment “ensure[s] that an otherwise exempt employer is not disqualified because the employer’s purposes extend beyond the inculcation of religious values or because the employer serves or hires people of different religious faiths”; and
2. Outlines accommodations for health coverage established or maintained by eligible organizations – or arranged by eligible organizations that are religious institutes of higher education – with religious objections to contraceptive coverage.

The proposed rule clarifies terminology related to the preventive health services requirements and exemptions:

• “Contraceptive coverage” is defined as the contraceptive services required under the Health Resources and Services Administration (HRSA) Guidelines (i.e., all FDA-approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity, as prescribed by a health care provider).
• For purposes of the religious employer exemption, the definition of a “religious employer” is simplified to an employer that is organized and operates as a nonprofit entity and referred to in section 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Service Code, including churches, other houses of worship, and their integrated auxiliaries. The Departments explain that this amended definition no longer leaves “any question as to whether group health plans of houses of worship that provide educational, charitable, or social services to their communities qualify for the exemption.”
• For purposes of the proposed rule, an “eligible organization” is an organization that meets all of the following criteria:

1. Opposes providing coverage for some or all of the contraceptive services required to be covered under Section 2713 of the Public Health Service Act on account of religious objections;
2. Is organized and operates as a nonprofit entity;
3. Holds itself out as a religious organization; and
4. Self-certifies satisfaction of the first three criteria.

The proposed rule outlines the processes by which preventive health services may be provided to plan participants and beneficiaries without cost-sharing to these individuals.  For insured plans, the eligible organizations would provide an issuer with a copy of the organization’s self-certification that the organization is exempt, and the issuer would automatically enroll plan participants and beneficiaries in a separate individual health insurance policy that covers contraceptive services.  The eligible organization would have no role in contracting, arranging, paying, or referring for separate contractive coverage.

For self-insured plans, the Departments are seeking comments on three potential approaches for providing separate preventive health services coverage.  Under all approaches, if there is a third party administrator (TPA) for the self-insured group health plan of the eligible organization, the organization would provide the TPA with a copy of its self-certification, and the TPA would arrange separate individual health insurance policies similar to the insured plan approach outlined above. The three potential approaches include:

1. The TPA would have an incentive to voluntarily arrange for the separate individual health policies because the TPA would be compensated by the issuer of the contraceptive coverage for arranging coverage.  In arranging for the coverage, the TPA would be acting in its independent capacity apart from its capacity as an agent of the plan. The self-insured plan would be treated as complying with the requirement to provide coverage without cost sharing based on the TPA’s receipt of the self-certification.
2. Coverage under the eligible organization’s plan would comply with the requirement to provide coverage without cost sharing only if the TPA automatically arranges for an insurer to assume sole responsibility for providing separate individual health insurance policies offering the required preventive health services coverage.
3. The TPA would be directly responsible for automatically arranging for the preventive health services coverage.  Under this approach, the organization’s self-certification would have the effect of designating the TPA as the plan administrator for the purpose of fulfilling the requirement to provide the required preventive health services coverage.

The proposed rule also outlines guidance regarding treatment of multi-employer group health plans and student health insurance coverage.  Finally, the proposed rule would require issuers to provide notice of availability of contraceptive coverage to participants and beneficiaries.

Comments to the proposed rule may be submitted to the Centers for Medicare and Medicaid Services on or before April 8, 2013.