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Judicial Watch • Obamacare records from DOH HS Part 1 982011

Obamacare records from DOH HS Part 1 982011

Obamacare records from DOH HS Part 1 982011

Page 1: Obamacare records from DOH HS Part 1 982011

Category:General

Number of Pages:876

Date Created:August 30, 2011

Date Uploaded to the Library:February 20, 2014

Tags:Conclusion, Departments, Plans, coverage, affordable, benefits, facts, DOMA, Department of the Treasury, health, HHS, Insurance, Group, September, individual, section, Obama, department, State, EPA, IRS, ICE, CIA


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From: Drobac, Krista (HHS/OCIIO) To: Reali, Francis (HHS/ASPA); Weiser, Amy (HHS/OGC) Subject: E-mails annual limits Date: Friday, May 13, 2011 1:41:00 Attachments: 15478.msg 15478.msg 
Final Version Pack Consumer Protections.msg 4-pack consumer protections.msg 4-Pack Proofreading.msg 4-Pack Proofreading.msg Consumer Protection IFR.msg 
4-Pack Proofreading.msg 
Omnibus RIA and PRA MEAG.docx.msg 4-pack formally 5-p.msg 
Pkg Overview and Reg Text 245pm clean.doc.msg 
Pkg Overview and Reg Text 6.18.10 245pm clean.msg 
Pkg Overview and Reg Text 6.18.10 245pm clean.msg 
Pkg Overview and Reg Text 5pm Response OMB Passback.doc.msg 
Pkg Overview and Reg Text 5pm Response OMB Passback.doc.msg pack reg text.msg Draft Passback Consumer Protection IFR.msg UPDATE -Status Hi-Five.msg Status.msg Status.msg Need for Regulatory Action Section.msg Need for Regulatory Action Section.msg 
Pkg Overview and Reg Text 6.17.10 5pm Response OMB Passback.msg 
Pkg Overview and Reg Text 6.17.10 5pm Response OMB Passback.msg HHS Comments MinibusHigh-Five.msg OCIIO-9994-IFC Interim Final Rules under the Patient Protection and Affordable Care Act Regarding 
Preexisting Condition Exclusions Lifetime and Annual Limits Rescissions Prohibition Discrimination Favor 
the Highly Compensated Patient Prot.msg Request for Clearance OCIIO-9994-IFC.msg Request for Clearance OCIIO-9994-IFC.msg 
OCIIO-9994-IFC Interim Final Rules under the Patient Protection and Affordable Care Act Regarding Preexisting 
Condition Exclusions Lifetime and Annual Limits Rescissions Prohibition Discrimination Favor the Highly 
Compensated Patient Protecti.msg Draft Passback Consumer Protection IFR.msg 
HHS Comments MinibusHigh-Five.msg Review and Clearance OCIIO-9994-IFC.msg Review and Clearance OCIIO-9994-IFC.msg Review and Clearance OCIIO-9994-IFC.msg 
Request for Clearance OCIIO-9994-IFC.msg Review and Clearance OCIIO-9994-IFC.msg Review and Clearance OCIIO-9994-IFC.msg Accounting Statement.msg 
Pkg Omnibus 4PM clean.msg 
Pkg Omnibus 4PM clean.msg Pkg Omnibus 6.14.10 6pm.msg 
Pkg Reg Text AMSchanges.doc.msg Clean Drafts.msg Clean Drafts.msg 
Clean Drafts.msg Emailing Pkg Reg Text 6.10.10 130pm clean.msg limited benefits excepted benefits.msg Pkg Reg Text 6.8.10 5pm.msg 
Pkg Reg Text 6.8.10 5pm.msg have attempted quick summary the .msg 
annual limits.msg 
Plan for Tomorrow.msg Groom Law Group analysis.msg 
Small Business Concil letter annual limit.msg Preamble language.msg Comment Letter.msg 100pm Weds -Annual Limits meeting.msg Hill -Annual Limits.msg Reg Text 4.27.10 1pm.msg Clean and Redline versions from today.msg Meeting Request Annual Dollar LimitsLimited Medical Benefit Plans.msg Meeting Request Annual Dollar LimitsLimited Medical Benefit Plans.msg Hill -Annual Limits.msg Hill -Annual Limits.msg 
Okay, these are the emails that may responsive. They are mostly the discussion related the publication the regulation that had the waiver program it. Unfortunately, because there were many policies the 4 pack regulation, there are emails here that make mention the annual limit program but have the draft reg attached, which does include section annual limits. will leave you decide all the reg drafts are responsive. They seem not be. 
From:  Turner, Amy -EBSA  
To:  Mayhew, James (CMS/CPC)  
Subject:  Fw: 15478  
Date:  Monday, June 21, 2010 3:39:05  
Attachments:  IRS EBSA HHS 2010-15278-WORK.DOC  

Sent via Blackberry 

From: Potts, Oliver (HHS/IOS)  
To: Russell.E.Weinheimer@IRSCOUNSEL.TREAS.GOV 
; Schumacher, Elizabeth EBSA; Barco, Evell 
(CMS/OSORA) ; Turner, Amy EBSA; Baum, Beth EBSA; Cantwell, 
Kathleen (HHS) ; Fultz-Mimms, Trenesha (CMS/OSORA) 
; Parker, Lisa (CMS/OSORA)  
Cc: Smalls, Dawn (HHS/IOS)  
Sent: Mon Jun 15:33:45 2010 
Subject: FW: 15478 

Please attached and OFR email below. Thanks. 
Oliver Oliver Potts Director, ODRM Executive Secretariat, OS/IOS 
(t) 
202-690-7161 

(c) 
202-525-8617 

From: Brooks, Edward [mailto:ebrooks@gpo.gov] Sent: Monday, June 21, 2010 3:29 To: Potts, Oliver (HHS/IOS); 'Garrett Treena Subject: 15478 
Oliver and Treena, 
This markup for the larger the two documents you want filed tomorrow 11:15. 

Mostly style edits, but the IRS rules have problem and questions. The problem expiration date that far too vague. 
See comments. working offsite, email best, but you can call the Blackberry number below, 

you need to. Putting your comments into the markup and returning good way 
answer questionsbut leave all track changes, not send clean copy. 
Thanks 
Brad Brooks 

Office the Federal Register Scheduling 
(202) 741-6061 Blackberry: (301) 974-4623 ebrooks@gpo.gov 
From: 	Baum, Beth -EBSA 
To: 	Corrigan, Dara (HHS/OHR); Mayhew, James (CMS/CPC); Kosin, Donald (HHS/OGC); Knopf Kevin -OTP; Weinheimer Russell Levin Karen; Turner, Amy -EBSA; Schumacher, Elizabeth -EBSA; Stafford, Leslie (HHS/OGC); Dailey, Joan (HHS/OGC); Cosby, Chris -EBSA; Butikofer, James -EBSA; Piacentini, Joseph -EBSA; Seshamani, Meena (HHS/OHR); Kronick, Richard (HHS/ASPE/HP); Sheingold, Steven (HHS/ASPE); Cantwell, Kathleen (HHS); Barco, Evell (CMS/OEORA); Miller, Timothy (CMS/OSORA); george.bostick@do.treas.gov; 
Helen.Morrison@do.treas.gov; Mark.Iwry@do.treas.gov; Tawshunsky Alan 
Subject: 	Final Version Pack Consumer Protections 
Date: 	Monday, June 21, 2010 10:36:49 
Attachments: 	Pkg Omnibus 6.21.10 730am FINAL for OFR.doc 
 
Attached the final document that delivered the OFR this morning. 
Thanks, 
Beth Baum 
U.S. Department Labor, Employee Benefit Security Administration Office Health Plan Standards and Compliance Assistance Email: baum.beth@dol.gov Phone: (202) 693-8345 
Fax: (202) 219-1942 
[Billing Codes: 4830-01-P; 4510-29-P; 4120-01-P] 
DEPARTMENT THE TREASURY Internal Revenue Service CFR Parts and 602 9491 RIN 1545-BJ61 DEPARTMENT LABOR Employee Benefits Security Administration CFR Part 2590 RIN 1210-AB43 DEPARTMENT HEALTH AND HUMAN SERVICES Office Consumer Information and Insurance Oversight OCIIO-9994-IFC CFR Parts 144, 146, and 147 RIN 0991-AB69 Interim Final Rules under the Patient Protection and Affordable Care Act Regarding Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections AGENCIES:  Internal Revenue Service, Department the Treasury; Employee Benefits Security Administration, Department Labor; Office Consumer Information and Insurance Oversight, Department Health and Human Services. ACTION:  Interim final rules with request for comments. 
SUMMARY: This document contains interim final regulations implementing the rules for group health plans and health insurance coverage the group and individual markets under provisions the Patient Protection and Affordable Care Act regarding preexisting condition exclusions, lifetime and annual dollar limits benefits, rescissions, and patient protections.     DATES: Effective date.  These interim final regulations are effective [INSERT DATE DAYS AFTER PUBLICATION FEDERAL REGISTER]. 
Comment date. Comments are due before [INSERT DATE DAYS AFTER PUBLICATION FEDERAL REGISTER]. 
Applicability dates: 
Group health plans and group health insurance coverage. These interim final regulations, except those under PHS Act section 2704 (26 CFR 54.9815-2704T, CFR 2590.715-2704, CFR 147.108), generally apply group health plans and group health insurance issuers for plan years beginning after September 23, 2010.  These interim final regulations under PHS Act section 2704 (26 CFR 54.9815-2704T, CFR 2590.715-2704, CFR 147.108) generally apply for plan years beginning after January 2014, except that the case individuals who are under years age, these interim final regulations under PHS Act section 2704 apply for plan years beginning after September 23, 2010. 
Individual health insurance coverage. These interim final regulations, except those under PHS Act section 2704 (45 CFR 147.108), generally apply individual health insurance issuers for policy years beginning after September 23, 2010.  These interim final regulations under PHS Act section 2704 (45 CFR 147.108) generally apply individual health insurance issuers for policy years beginning after January 2014, except that the case enrollees who are under years age, these interim final regulations under PHS Act section 2704 apply for policy years beginning after September 23, 2010. 
ADDRESSES:  Written comments may submitted any the addresses specified below. Any comment that submitted any Department will shared with the other Departments.  Please not submit duplicates.   
All comments will made available the public.  WARNING: not include any personally identifiable information (such name, address, other contact information) confidential business information that you not want publicly disclosed.  All comments are posted the Internet exactly received, and can retrieved most Internet search engines. deletions, modifications, redactions will made the comments received, they are public records.  Comments may submitted anonymously. 
Department Labor. Comments the Department Labor, identified RIN 1210AB43, one the following methods: 

  Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. 

  Email: E-OHPSCA715.EBSA@dol.gov. 


 Mail Hand Delivery: Office Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department Labor, 200 Constitution Avenue NW, Washington, 20210, Attention: RIN 1210-AB43. 

Comments received the Department Labor will posted without change http://www.regulations.gov and http://www.dol.gov/ebsa, and available for public inspection the Public Disclosure Room, N-1513, Employee Benefits Security Administration, 200 Constitution Avenue, NW, Washington, 20210.   
Department Health and Human Services. commenting, please refer file code OCIIO-9994-IFC. Because staff and resource limitations, cannot accept comments facsimile (FAX) transmission.  You may submit comments one four ways (please choose only one the ways listed): Electronically. You may submit electronic comments this regulation http://www.regulations.gov. Follow the instructions under the More Search Options tab. regular mail. You may mail written comments the following address ONLY: 
Office Consumer Information and Insurance Oversight 
Department Health and Human Services,  
Attention: OCIIO-9994-IFC,  

P.O. Box 8016, 
Baltimore, 21244-1850. 
Please allow sufficient time for mailed comments received before the 

close the comment period. express overnight mail. You may send written comments the following 
address ONLY: Office Consumer Information and Insurance Oversight,  Department Health and Human Services,  Attention: OCIIO-9994-IFC,  Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, 21244-1850. hand courier. you prefer, you may deliver (by hand courier) your written comments before the close the comment period either the following addresses: For delivery Washington, DC-- 
Office Consumer Information and Insurance Oversight, 
Department Health and Human Services,  
Room 445-G, Hubert Humphrey Building,  
200 Independence Avenue, SW,  
Washington, 20201 
(Because access the interior the Hubert Humphrey Building not readily 

available persons without Federal government identification, commenters are encouraged leave their comments the OCIIO drop slots located the main lobby the building. stamp-in clock available for persons wishing retain proof filing stamping and retaining extra copy the comments being filed.) For delivery Baltimore, MD--
 Centers for Medicare Medicaid Services,  
Department Health and Human Services, 
7500 Security Boulevard, 
Baltimore, 21244-1850 you intend deliver your comments the Baltimore address, please call (410) 786
7195 advance schedule your arrival with one our staff members.   Comments mailed the addresses indicated appropriate for hand courier delivery may delayed and received after the comment period. 
Submission comments paperwork requirements. You may submit comments this documents paperwork requirements following the instructions the end the Collection Information Requirements section this document. 
   Inspection Public Comments: All comments received before the close the comment period are available for viewing the public, including any personally identifiable confidential business information that included comment. post all comments received before the close the comment period the following website soon possible after they have been received: http://www.regulations.gov. Follow the search instructions that Web site view public comments.   
Comments received timely will also available for public inspection they are received, generally beginning approximately three weeks after publication document, the headquarters the Centers for Medicare Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday each week from 8:30 a.m. p.m. EST. schedule appointment view public comments, phone 1-800-743-3951. 
Internal Revenue Service. Comments the IRS, identified REG-120399-10, one the following methods:  
  Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. 
 Mail: CC:PA:LPD:PR (REG-120399-10), Room 5205, Internal Revenue Service, 
P.O. Box 7604, Ben Franklin Station, Washington, 20044. 
 Hand courier delivery: Monday through Friday between the hours a.m. and p.m. to: CC:PA:LPD:PR (REG-120399-10), Couriers Desk, Internal Revenue Service, 1111 Constitution Avenue, NW, Washington 20224. 
All submissions the IRS will open public inspection and copying Room 1621, 1111 Constitution Avenue, NW, Washington, from a.m. p.m. FOR FURTHER INFORMATION CONTACT:  Amy Turner Beth Baum, Employee Benefits Security Administration, Department Labor, (202) 693-8335; Karen Levin, Internal Revenue Service, Department the Treasury, (202) 622-6080; Jim Mayhew, Office Consumer Information and Insurance Oversight, Department Health and Human Services, (410) 786-1565. CUSTOMER SERVICE INFORMATION: Individuals interested obtaining information from the Department Labor concerning employment-based health coverage laws may call the EBSA Toll-Free Hotline 1-866-444-EBSA (3272) visit the Department Labors website (http://www.dol.gov/ebsa). addition, information from HHS private health insurance for consumers can found the Centers for Medicare Medicaid Services (CMS) website (http://www.cms.hhs.gov/HealthInsReformforConsume/01_Overview.asp) and information health reform can found http://www.healthreform.gov. SUPPLEMENTARY INFORMATION: Background 
The Patient Protection and Affordable Care Act (the Affordable Care Act), Pub. 111148, was enacted March 23, 2010; the Health Care and Education Reconciliation Act (the Reconciliation Act), Pub. 111-152, was enacted March 30, 2010.  The Affordable Care Act and the Reconciliation Act reorganize, amend, and add the provisions part title XXVII the Public Health Service Act (PHS Act) relating group health plans and health insurance issuers the group and individual markets. The term group health plan includes both insured and self-insured group health plans.1 The Affordable Care Act adds section 715(a)(1) the Employee Retirement Income Security Act (ERISA) and section 9815(a)(1) the Internal Revenue Code (the Code) incorporate the provisions part title XXVII the PHS Act into ERISA and the Code, and make them applicable group health plans, and health insurance issuers providing health insurance coverage connection with group health plans.  The PHS Act sections incorporated this reference are sections 2701 through 2728. PHS Act sections 2701 through 2719A are substantially new, though they incorporate some provisions prior law.  PHS Act sections 2722 through 2728 are sections prior law renumbered, with some, mostly minor, changes.   
Subtitles and title the Affordable Care Act amend the requirements title XXVII the PHS Act (changes which are incorporated into ERISA section 715).  The preemption provisions ERISA section 731 and PHS Act section 27242 (implemented CFR 2590.731(a) and CFR 146.143(a)) apply that the requirements part ERISA and title XXVII the PHS Act, amended the Affordable Care Act, are not construed supersede any provision State law which establishes, implements, continues effect any standard requirement solely relating health insurance issuers connection with group individual health insurance coverage except the extent that such standard requirement prevents the application requirement the Affordable Care Act.  Accordingly, State laws that impose health insurance issuers requirements that are stricter than the requirements imposed the Affordable Care Act will not superseded the Affordable Care Act. The term group health plan used title XXVII the PHS Act, part ERISA, and chapter 100 the Code, 
and distinct from the term health plan, used other provisions title the Affordable Care Act.  The 
term health plan does not include self-insured group health plans. Code section 9815 incorporates the preemption provisions PHS Act section 2724.  Prior the Affordable Care 
Act, there were express preemption provisions chapter 100 the Code. 

The Departments Health and Human Services, Labor, and the Treasury (the Departments) are issuing regulations several phases implementing the revised PHS Act sections 2701 through 2719A and related provisions the Affordable Care Act.  The first phase this series was pair publications consisting Request for Information relating the medical loss ratio provisions PHS Act section 2718 and Request for Information relating the rate review process PHS Act 2794, both published the Federal Register April 14, 2010 (75 19297 and 19335). The second phase was interim final regulations implementing PHS Act section 2714 (requiring coverage adult children age 26), published the Federal Register May 13, 2010 (75 27122). The third phase was interim final regulations implementing section 1251 the Affordable Care Act (relating status grandfathered health plan), published the Federal Register June 17, 2010 (75 34538). These interim final regulations are being published implement PHS Act sections 2704 (prohibiting preexisting condition exclusions), 2711 (regarding lifetime and annual dollar limits benefits), 2712 (regarding restrictions rescissions), and 2719A (regarding patient protections).  PHS Act section 2704 generally effective for plan years (in the individual market, policy years) beginning after January 2014. However, with respect enrollees, including applicants for enrollment, who are under years age, PHS Act section 2704 effective for plan years beginning after September 23, 2010 (which six months after the March 23, 2010 date enactment the Affordable Care Act); the case individual health insurance coverage, for policy years beginning, applications denied, after September 23, 2010.3 The rest these provisions generally are effective for plan years (in the individual market, policy years) beginning after September 23, 2010.  The implementation other provisions PHS Act sections 2701 through 2719A will addressed future regulations. Section 1255 the Affordable Care Act.  See also section 10103(e)-(f) the Affordable Care Act. 
II. 
Overview the Regulations 
PHS Act Section 2704, Prohibition Preexisting Condition Exclusions (26 CFR 54.98152704T, CFR 2590.715-2704, CFR 147.108) Section 1201 the Affordable Care Act adds new PHS Act section 2704, which amends the HIPAA4 rules relating preexisting condition exclusions provide that group health plan and health insurance issuer offering group individual health insurance coverage may not impose any preexisting condition exclusion.  The HIPAA rules (in effect prior the effective date these amendments) apply only group health plans and group health insurance coverage, and permit limited exclusions coverage based preexisting condition under certain circumstances.  The Affordable Care Act provision prohibits any preexisting condition exclusion from being imposed group health plans group health insurance coverage and extends this protection individual health insurance coverage. This prohibition generally effective with respect plan years (in the individual market, policy years) beginning after January 2014, but for enrollees who are under years age, this prohibition becomes effective for plan years (in the individual market, policy years) beginning after September 23, 2010. Until the new Affordable Care Act rules take effect, the HIPAA rules regarding preexisting condition exclusions continue apply.    HIPAA generally defines preexisting condition exclusion5 limitation exclusion benefits relating condition based the fact that the condition was present before the date enrollment for the coverage, whether not any medical advice, diagnosis, care, treatment 

was recommended received before that date.  Based this definition, PHS Act section 2704, added the Affordable Care Act, prohibits not just exclusion coverage specific HIPAA the Health Insurance Portability and Accountability Act 1996 (Public Law 104-191). Before the amendments made the Affordable Care Act, PHS Act section 2701(b)(1); after the amendments 
made the Affordable Care Act, PHS Act section 2704(b)(1).  See also ERISA section 701(b)(1) and Code section 
9801(b)(1). 

benefits associated with preexisting condition the case enrollee, but complete exclusion from such plan coverage, that exclusion based preexisting condition.   
The protections the new PHS Act section 2704 generally apply for plan years (in the individual market, policy years) beginning after January 2014.  The Affordable Care Act provides, however, that these protections apply with respect enrollees under age for plan years (in the individual market, policy years) beginning after September 23, 2010. enrollee under age thus could not denied benefits based preexisting condition. order for individual seeking enrollment receive the same protection that applies the case such enrollee, the individual similarly could not denied enrollment specific benefits based preexisting condition. Thus, for plan years (in the individual market, policy years) beginning after September 23, 2010, PHS Act section 2704 protects individuals under age with preexisting condition from being denied coverage under plan health insurance coverage (through denial enrollment denial specific benefits) based the preexisting condition. 
These interim final regulations not change the HIPAA rule that exclusion benefits for condition under plan policy not preexisting condition exclusion the exclusion applies regardless when the condition arose relative the effective date coverage. This point illustrated with examples the HIPAA regulations preexisting condition exclusions, which remain effect.6  (Other requirements Federal State law, however, may prohibit certain benefit exclusions.)   
Application grandfathered health plans. Under the statute and these interim final regulations, grandfathered health plan that group health plan group health insurance coverage must comply with the PHS Act section 2704 prohibition against preexisting condition See Examples and CFR 54.9801-3(a)(1)(ii), CFR 701-3(a)(1)(ii), CFR 146.111(a)(1)(ii). 
exclusions; however, grandfathered health plan that individual health insurance coverage not required comply with PHS Act section 2704.  See CFR 54.9815-1251T, CFR 2590.715-1251, and CFR 147.140 regarding status grandfathered health plan. PHS Act Section 2711, Lifetime and Annual Limits (26 CFR 54.9815-2711T, CFR 2590.715-2711, CFR 147.126) Section 2711 the PHS Act, added the Affordable Care Act, and these interim final regulations generally prohibit group health plans and health insurance issuers offering group individual health insurance coverage from imposing lifetime annual limits the dollar value health benefits.   The restriction annual limits applies differently certain account-based plans, especially where other rules apply limit the benefits available.  For example, under section 9005 the Affordable Care Act, salary reduction contributions for health flexible spending arrangements (health FSAs) are specifically limited $2,500 (indexed for inflation) per year,  beginning with taxable years 2013.  These interim final regulations provide that the PHS Act section 2711 annual limit rules not apply health FSAs.  The restrictions annual limits also not apply Medical Savings Accounts (MSAs) under section 220 the Code and Health Savings Accounts (HSAs) under section 223 the Code.  Both MSAs and HSAs generally are not treated group health plans because the amounts available under the plans are available for both medical and non-medical expenses.7 Moreover, annual contributions MSAs and HSAs are subject specific statutory provisions that require that the contributions limited.   
Health Reimbursement Arrangements (HRAs) are another type account-based health plan and typically consist promise employer reimburse medical expenses for the Distributions from MSAs and HSAs that are not used for qualified medical expenses are included income and subject additional tax, under sections 220(f)(1), (4) and 223(f)(1), (4) the Code. 
year certain amount, with unused amounts available reimburse medical expenses future years. See Notice 2002-45, 2002-28 IRB 93; Rev. Rul. 2002-41, 2002-28 IRB 75.  When HRAs are integrated with other coverage part group health plan and the other coverage alone would comply with the requirements PHS Act section 2711, the fact that benefits under the HRA itself are limited does not violate PHS Act section 2711 because the combined benefit satisfies the requirements.  Also, the case stand-alone HRA that limited retirees, the exemption from the requirements ERISA and the Code relating the Affordable Care Act for plans with fewer than two current employees means that the retiree-only HRA generally not subject the rules PHS Act section 2711 relating annual limits.  The Departments request comments regarding the application PHS Act section 2711 stand-alone HRAs that are not retiree-only plans. 
The statute prohibits annual limits the dollar value benefits generally, but allows restricted annual limits with respect essential health benefits (as defined section 1302(b) the Affordable Care Act) for plan years (in the individual market, policy years) beginning before January 2014. Grandfathered individual market policies are exempted from this provision. addition, the statute provides that, with respect benefits that are not essential health benefits, plan issuer may impose annual lifetime per-individual dollar limits specific covered benefits.  These interim final regulations define essential health benefits cross-reference section 1302(b) the Affordable Care Act8 and applicable regulations. Regulations under section 1302(b) the Affordable Care Act have not yet been issued. Section 1302(b) the Affordable Care Act defines essential health benefits include least the following general categories and the items and services covered within the categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. 
For plan years (in the individual market, policy years) beginning before the issuance regulations defining essential health benefits, for purposes enforcement, the Departments will take into account good faith efforts comply with reasonable interpretation the term essential health benefits.  For this purpose, plan issuer must apply the definition essential health benefits consistently. For example, plan could not both apply lifetime limit particular benefit  thus taking the position that was not essential health benefit  and the same time treat that particular benefit essential health benefit for purposes applying the restricted annual limit. 
These interim final regulations clarify that the prohibition under PHS Act section 2711 does not prevent plan issuer from excluding all benefits for condition, but any benefits are provided for condition, then the requirements the rule apply.  Therefore, exclusion all benefits for condition not considered annual lifetime dollar limit.   
The statute and these interim final regulations provide that for plan years (in the individual market, policy years) beginning before January 2014, group health plans and health insurance issuers offering group individual health insurance coverage may establish restricted annual limit the dollar value essential health benefits.  The statute provides that defining the term restricted annual limit, the Departments should ensure that access needed services made available with minimal impact premiums.  For detailed discussion the basis for determining restricted annual limits, see section IV.B.3 later this preamble. order mitigate the potential for premium increases for all plans and policies, while the same time ensuring access essential health benefits, these interim final regulations adopt three-year phased approach for restricted annual limits.  Under these interim final regulations, annual limits the dollar value benefits that are essential health benefits may not less than 
the following amounts for plan years (in the individual market, policy years) beginning before January 2014:  For plan policy years beginning after September 23, 2010 but before September 23, 2011, $750,000;   For plan policy years beginning after September 23, 2011 but before September 23, 2012, $1.25 million; and  For plan policy years beginning after September 23, 2012 but before 
January 2014, million. these are minimums for plan years (in the individual market, policy years) beginning before 2014, plans issuers may use higher annual limits impose limits.  Plans and policies with plan policy years that begin between September and December have more than one plan policy year under which the million minimum annual limit available; however, plan policy generally may not impose annual limit for plan year (in the individual market, policy year) beginning after December 31, 2013. 
The minimum annual limits for plan policy years beginning before 2014 apply individual-by-individual basis.  Thus, any overall annual dollar limit benefits applied families may not operate deny covered individual the minimum annual benefits for the plan year (in the individual market, policy year). These interim final regulations clarify that, applying annual limits for plan years (in the individual market, policy years) beginning before January 2014, the plan health insurance coverage may take into account only essential health benefits. 
The restricted annual limits provided these interim final regulations are designed ensure, the vast majority cases, that individuals would have access needed services with minimal impact premiums. that individuals with certain coverage, including coverage under limited benefit plan so-called mini-med plans, would not denied access needed services experience more than minimal impact premiums, these interim final regulations provide for the Secretary Health and Human Services establish program under which the requirements relating restricted annual limits may waived compliance with these interim final regulations would result significant decrease access benefits significant increase premiums.  Guidance from the Secretary Health and Human Services regarding the scope and process for applying for waiver expected issued the near future. 
Under these interim final regulations, individuals who reached lifetime limit under plan health insurance coverage prior the applicability date these interim final regulations and are otherwise still eligible under the plan health insurance coverage must provided with notice that the lifetime limit longer applies. such individuals are longer enrolled the plan health insurance coverage, these interim final regulations also provide enrollment (in the individual market, reinstatement) opportunity for such individuals. the individual market, this reinstatement opportunity does not apply individuals who reached their lifetime limits individual health insurance coverage the contract not renewed otherwise longer effect. would apply, however, family member who reached the lifetime limit family policy the individual market while other family members remain the coverage.  These notices and the enrollment opportunity must provided beginning not later than the first day the first plan year (in the individual market, policy year) beginning after September 23, 2010. Anyone eligible for enrollment opportunity must treated special enrollee.9 That is, they must given the right enroll all the benefit packages available similarly situated individuals upon initial enrollment. See CFR 54.9801-6(d), CFR 2590.701-6(d), and CFR 146.117(d). 
Application grandfathered health plans. The statute and these interim final regulations relating the prohibition lifetime limits apply all group health plans and health insurance issuers offering group individual health insurance coverage, whether not the plan qualifies grandfathered health plan, for plan years (in the individual market, policy years) beginning after September 23, 2010.  The statute and these interim final regulations relating the prohibition annual limits, including the special rules regarding restricted annual limits for plan years beginning before January 2014, apply group health plans and group health insurance coverage that qualify grandfathered health plan, but not apply grandfathered health plans that are individual health insurance coverage.  The interim final regulations issued under section 1251 the Affordable Care Act provide that: 
 plan health insurance coverage that, March 23, 2010, did not impose overall annual lifetime limit the dollar value all benefits ceases grandfathered health plan the plan health insurance coverage imposes overall annual limit the dollar value benefits. 
 plan health insurance coverage, that, March 23, 2010, imposed overall lifetime limit the dollar value all benefits but overall annual limit the dollar value all benefits ceases grandfathered health plan the plan health insurance coverage adopts overall annual limit dollar value that lower than the dollar value the lifetime limit March 23, 2010.   
 plan health insurance coverage that, March 23, 2010, imposed overall annual limit the dollar value all benefits ceases grandfathered health plan the plan health insurance coverage decreases the dollar value the annual limit (regardless whether the plan health insurance coverage also imposed overall lifetime limit March 23, 2010 the dollar value all benefits). 	PHS Act Section 2712, Prohibition Rescissions (26 CFR 54.9815-2712T, CFR 2590.715-2712, CFR 147.128) PHS Act section 2712 provides rules regarding rescissions health coverage for group health plans and health insurance issuers offering group individual health insurance coverage.  Under the statute and these interim final regulations, group health plan, health insurance issuer offering group individual health insurance coverage, must not rescind coverage except the case fraud intentional misrepresentation material fact.  This standard sets Federal floor and more protective individuals with respect the standard for rescission than the standard that might have previously existed under State insurance law Federal common law. That is, under prior law, rescission may have been permissible individual made misrepresentation material fact, even the misrepresentation was not intentional made knowingly. Under the new standard for rescissions set forth PHS Act section 2712 and these interim final regulations, plans and issuers cannot rescind coverage unless individual was involved fraud made intentional misrepresentation material fact.  This standard applies all rescissions, whether the group individual insurance market, and whether insured self-insured coverage.  These rules also apply regardless any contestability period that may otherwise apply. This provision PHS Act section 2712 builds already-existing protections PHS Act sections 2703(b) and 2742(b) regarding cancellations coverage.  These provisions generally provide that health insurance issuer the group and individual markets cannot 
cancel, fail renew, coverage for individual group for any reason other than those enumerated the statute (that is, nonpayment premiums; fraud intentional 
misrepresentation material fact; withdrawal product withdrawal issuer from the market; movement individual employer outside the service area; or, for bona fide association coverage, cessation association membership).  Moreover, this new provision also builds existing HIPAA nondiscrimination protections for group health coverage ERISA section 702, Code section 9802, and PHS Act section 2705 (previously included PHS Act section 2702 prior the Affordable Care Acts amendments and reorganization PHS Act title XXVII). The HIPAA nondiscrimination provisions generally provide that group health plans and group health insurance issuers may not set eligibility rules based factors such health status and evidence insurability  including acts domestic violence disability.  They also provide limits the ability plans and issuers vary premiums and contributions based health status.  For policy years beginning after January 2014, additional protections will apply the individual market, including guaranteed issue all products, nondiscrimination based health status, and preexisting condition exclusions.  These protections will reduce the likelihood rescissions. 
These interim final regulations also clarify that other requirements Federal State law may apply connection with rescission cancellation coverage beyond the standards established PHS Act section 2712, they are more protective individuals.  For example, State law applicable health insurance issuers were provide that rescissions are permitted only cases fraud, only within contestability period, which more protective individuals, such law would not conflict with, preempted by, the Federal standard and would apply. 
These interim final regulations include several clarifications regarding the standards for rescission PHS Act section 2712. First, these interim final regulations clarify that the rules PHS Act section 2712 apply whether the rescission applies single individual, individual within family, entire group individuals.  Thus, for example, issuer attempted rescind coverage entire employment-based group because the actions individual within the group, the standards these interim final regulations would apply.  Second, these interim final regulations clarify that the rules PHS Act section 2712 apply representations made the individual person seeking coverage behalf the individual.  Thus, plan sponsor seeks coverage from issuer for entire employment-based group and makes representations, for example, regarding the prior claims experience the group, the standards these interim final regulations would also apply.  Finally, PHS Act section 2712 refers acts practices that constitute fraud. These interim final regulations clarify that, the extent that omission constitutes fraud, that omission would permit the plan issuer rescind coverage under this section. example these interim final regulations illustrates the application the rule misstatements fact that are inadvertent.   
For purposes these interim final regulations, rescission cancellation discontinuance coverage that has retroactive effect.  For example, cancellation that treats policy void from the time the individuals groups enrollment rescission. another example, cancellation that voids benefits paid year before the cancellation also rescission for this purpose. cancellation discontinuance coverage with only prospective effect not rescission, and neither cancellation discontinuance coverage that effective retroactively the extent attributable failure timely pay required premiums contributions towards the cost coverage. Cancellations coverage are addressed under other Federal and State laws, including section PHS Act section 2703(b) and 2742(b), which limit the grounds for cancellation non-renewal coverage, discussed above.  Moreover, PHS Act section 2719, added the Affordable Care Act and incorporated ERISA section 715 and Code section 9815, addresses appeals coverage determinations and includes provisions for keeping coverage effect pending appeal.  The Departments expect issue guidance PHS Act section 2719 the very near future. addition setting new Federal floor standard for rescissions, PHS Act section 2712 adds new advance notice requirement when coverage rescinded where still permissible.   Specifically, the second sentence section 2712 provides that coverage may not cancelled unless prior notice provided. These interim final regulations provide that group health plan, health insurance issuer offering group health insurance coverage, must provide least calendar days advance notice individual before coverage may rescinded.10 The notice must provided regardless whether the rescission group individual coverage; whether, the case group coverage, the coverage insured self-insured, the rescission applies entire group only individual within the group.  This 30-day period will provide individuals and plan sponsors with opportunity explore their rights contest the rescission, look for alternative coverage, appropriate.  The Departments expect issue future guidance any notice requirements under PHS Act section 2712 for cancellations coverage other than the case rescission. this new Federal statutory protection against rescissions, the Affordable Care Act provides new rights individuals who, for example, may have done their best complete what can sometimes long, complex enrollment questionnaires but may have made some errors, for which the consequences were overly broad and unfair.  These interim final regulations provide initial guidance with respect the statutory restrictions rescission. the Departments Even though prior notice must provided the case rescission, applicable law may permit the rescission void coverage retroactively. 
become aware attempts the marketplace subvert these rules, the Departments may issue additional regulations administrative guidance ensure that individuals not lose health coverage unjustly without due process. 
Application grandfathered health plans. The rules regarding rescissions and advance notice apply all grandfathered health plans. 	PHS Act Section 2719A, Patient Protections (26 CFR 54.9815-2719AT, CFR 2590.7152719A, CFR 147.138) Section 2719A the PHS Act imposes, with respect group health plan, group individual health insurance coverage, set three requirements relating the choice health care professional and requirements relating benefits for emergency services.  The three requirements relating the choice health care professional apply only with respect plan health insurance coverage with network providers.11  Thus, plan issuer that has not negotiated with any provider for the delivery health care but merely reimburses individuals covered under the plan for their receipt health care not subject the requirements relating the choice health care professional.  However, such plans health insurance coverage are subject requirements relating benefits for emergency services.  These interim final regulations reorder the statutory requirements that all three the requirements relating the 
choice health care professional are together and add notice requirement for those three requirements.  None these requirements apply grandfathered health plans. 	Choice Health Care Professional 
The statute and these interim final regulations provide that group health plan, health insurance issuer offering group individual health insurance coverage, requires The statute and these interim final regulations refer providers both terms their participation (participating provider) and terms network (in-network provider). both situations, the intent refer provider that has contractual relationship other arrangement with plan issuer. 
provides for designation participant, beneficiary, enrollee participating primary care provider, then the plan issuer must permit each participant, beneficiary, enrollee designate any participating primary care provider who available accept the participant, beneficiary, enrollee. Under these interim final regulations, the plan issuer must provide notice informing each participant (or the individual market, the primary subscriber) the terms the plan health insurance coverage regarding designation primary care provider.   
The statute and these interim final regulations impose requirement for the designation pediatrician similar the requirement for the designation primary care physician.  Specifically, plan issuer requires provides for the designation participating primary care provider for child participant, beneficiary, enrollee, the plan issuer must permit the designation physician (allopathic osteopathic) who specializes pediatrics the child's primary care provider the provider participates the network the plan issuer and available accept the child. such case, the plan issuer must comply with the notice requirements with respect designation primary care provider.  The general terms the plan health insurance coverage regarding pediatric care otherwise are unaffected, including any exclusions with respect coverage pediatric care. 
The statute and these interim final regulations also provide rules for group health plan, health insurance issuer offering group individual health insurance coverage, that provides coverage for obstetrical gynecological care and requires the designation in-network primary care provider. such case, the plan issuer may not require authorization referral the plan, issuer, any person (including primary care provider) for female participant, beneficiary, enrollee who seeks obstetrical gynecological care provided in-network health care professional who specializes obstetrics gynecology.  The plan issuer must inform each participant (in the individual market, primary subscriber) that the plan issuer may not require authorization referral for obstetrical gynecological care participating health care professional who specializes obstetrics gynecology.  Nothing these interim final regulations precludes the plan issuer from requiring in-network obstetrical gynecological provider otherwise adhere policies and procedures regarding referrals, prior authorization for treatments, and the provision services pursuant treatment plan approved the plan issuer. The plan issuer must treat the provision obstetrical and gynecological care, and the ordering related obstetrical and gynecological items and services, the professional who specializes obstetrics gynecology the authorization the primary care provider.  For this purpose, health care professional who specializes obstetrics gynecology any individual who authorized under applicable State law provide obstetrical gynecological care, and not limited physician. 
The general terms the plan coverage regarding exclusions coverage with respect obstetrical gynecological care are otherwise unaffected.  These interim final regulations not preclude the plan issuer from requiring that the obstetrical gynecological provider notify the primary care provider the plan issuer treatment decisions. 
When applicable, important that individuals enrolled plan health insurance coverage know their rights (1) choose primary care provider pediatrician when plan issuer requires designation primary care physician; (2) obtain obstetrical gynecological care without prior authorization.  Accordingly, these interim final regulations require such plans and issuers provide notice participants (in the individual market, primary subscribers) these rights when applicable.  Model language provided these interim final regulations.  The notice must provided whenever the plan issuer provides participant with summary plan description other similar description benefits under the plan health insurance coverage, the individual market, provides primary subscriber with policy, certificate, contract health insurance. Emergency Services plan health insurance coverage provides any benefits with respect emergency services emergency department hospital, the plan issuer must cover emergency services way that consistent with these interim final regulations.  These interim final regulations require that plan health insurance coverage providing emergency services must without the individual the health care provider having obtain prior authorization (even the emergency services are provided out network) and without regard whether the health care provider furnishing the emergency services in-network provider with respect the services. The emergency services must provided without regard any other term condition the plan health insurance coverage other than the exclusion coordination benefits, affiliation waiting period permitted under part ERISA, part title XXVII the PHS Act, chapter 100 the Code, applicable cost-sharing requirements.  For plan health insurance coverage with network providers that provides benefits for emergency services, the plan issuer may not impose any administrative requirement limitation benefits for out-of-network emergency services that more restrictive than the requirements limitations that apply in-network emergency services.    
Additionally, for plan health insurance coverage with network, these interim final regulations provide rules for cost-sharing requirements for emergency services that are expressed copayment amount coinsurance rate, and other cost-sharing requirements.  Cost-sharing requirements expressed copayment amount coinsurance rate imposed for out-of-network emergency services cannot exceed the cost-sharing requirements that would imposed the services were provided in-network. Out-of-network providers may, however, also balance bill patients for the difference between the providers charges and the amount collected from the plan issuer and from the patient the form copayment coinsurance amount.  Section 1302(c)(3)(B) the Affordable Care Act excludes such balance billing amounts from the definition cost sharing, and the requirement section 2719A(b)(1)(C)(ii)(II) that cost sharing for out-of-network services limited that imposed network only applies cost sharing expressed copayment coinsurance rate. 
Because the statute does not require plans issuers cover balance billing amounts, and does not prohibit balance billing, even where the protections the statute apply, patients may subject balance billing. would defeat the purpose the protections the statute plan issuer paid unreasonably low amount provider, even while limiting the coinsurance copayment associated with that amount in-network amounts. avoid the circumvention the protections PHS Act section 2719A, necessary that reasonable amount paid before patient becomes responsible for balance billing amount.  Thus, these interim final regulations require that reasonable amount paid for services some objective standard. establishing the reasonable amount that must paid, the Departments had account for wide variation how plans and issuers determine both in-network and out-ofnetwork rates. For example, for plan using capitation arrangement determine in-network payments providers, there in-network rate per service.  Accordingly, these interim final regulations consider three amounts: the in-network rate, the out-of-network rate, and the Medicare rate. Specifically, plan issuer satisfies the copayment and coinsurance limitations the statute provides benefits for out-of-network emergency services amount equal the greatest three possible amounts 
(1)
 The amount negotiated with in-network providers for the emergency service furnished; 

(2)
 The amount for the emergency service calculated using the same method the plan generally uses determine payments for out-of-network services (such the usual, customary, and reasonable charges) but substituting the in-network cost-sharing provisions for the out-ofnetwork cost-sharing provisions; 

(3)
 The amount that would paid under Medicare for the emergency service.12 Each these three amounts calculated excluding any in-network copayment coinsurance imposed with respect the participant, beneficiary, enrollee.   

For plans and health insurance coverage under which there per-service amount negotiated with in-network providers (such under capitation other similar payment arrangement), the first amount above disregarded, meaning that the greatest amount going either the out-of-network amount the Medicare amount.  Additionally, with respect determining the first amount, plan issuer has more than one negotiated amount with in-network providers for particular emergency service, the amount the median these amounts, treating the amount negotiated with each provider separate amount determining the median.  Thus, for example, for given emergency service plan negotiated rate $100 with three providers, rate $125 with one provider, and rate $150 with one provider; the amounts taken into account determine the median would $100, $100, $100, $125, and $150; and the median would $100.  Following the commonly accepted definition median, the date publication these interim final regulations, these rates are available the public http://www.cms.hhs.gov/MedicareAdvtgSpecRateStats/downloads/oon-payments.pdf. 
there are even number amounts, the median the average the middle two.  (Cost sharing imposed with respect the participant, beneficiary, enrollee would deducted from this amount before determining the greatest the three amounts above.)  
The second amount above determined without reduction for out-of-network cost sharing that generally applies under the plan health insurance coverage with respect out-ofnetwork services. Thus, for example, plan generally pays percent the usual, customary, and reasonable amount for out-of-network services, the second amount above for emergency service the total (that is, 100 percent) the usual, customary, and reasonable amount for the service, not reduced the percent coinsurance that would generally apply out-of-network services (but reduced the in-network copayment coinsurance that the individual would responsible for the emergency service had been provided in-network). 
Although plan health insurance coverage generally not constrained the requirements PHS Act section 2719A for cost-sharing requirements other than copayments coinsurance, these interim final regulations include anti-abuse rule with respect such other cost-sharing requirements that the purpose limiting copayments and coinsurance for emergency services the in-network rate cannot thwarted manipulation these other cost-sharing requirements.  Accordingly, any other cost-sharing requirement, such deductible out-of-pocket maximum, may imposed with respect out-of-network emergency services only the cost-sharing requirement generally applies out-of-network benefits. Specifically, deductible may imposed with respect out-of-network emergency services only part deductible that generally applies out-of-network benefits.  Similarly, out-of-pocket maximum generally applies out-of-network benefits, that out-of-pocket maximum must apply out-of-network emergency services. plan health insurance coverage could fashion these other cost-sharing requirements that participant, beneficiary, enrollee required pay less for emergency services than for general out-of-network services; the anti-abuse rule merely prohibits plan health insurance coverage from fashioning such rules that participant, beneficiary, enrollee required pay more for emergency services than for general out-of-network services. applying the rules relating emergency services, the statute and these interim final regulations define the terms emergency medical condition, emergency services, and stabilize.  These terms are defined generally accordance with their meaning under the Emergency Medical Treatment and Labor Act (EMTALA), section 1867 the Social Security Act.  There are, however, some minor variances from the EMTALA definitions.  For example, both EMTALA and PHS Act section 2719A define "emergency medical condition" terms the same consequences that could reasonably expected occur the absence immediate medical attention.  Under EMTALA regulations, the likelihood these consequences determined qualified hospital medical personnel, while under PHS Act section 2719A the standard whether prudent layperson, who possesses average knowledge health and medicine, could reasonably expect the absence immediate medical attention result such consequences. 
Application grandfathered health plans. The statute and these interim final regulations relating certain patient protections not apply grandfathered health plans.  However, other Federal State laws related these patient protections may apply regardless grandfather status. 
III. Interim Final Regulations and Request for Comments 
Section 9833 the Code, section 734 ERISA, and section 2792 the PHS Act authorize the Secretaries the Treasury, Labor, and HHS (collectively, the Secretaries) promulgate any interim final rules that they determine are appropriate carry out the provisions chapter 100 the Code, part subtitle title ERISA, and part title XXVII the PHS Act, which include PHS Act sections 2701 through 2728 and the incorporation those sections into ERISA section 715 and Code section 9815. addition, under Section 553(b) the Administrative Procedure Act (APA) U.S.C. 551 seq.) general notice proposed rulemaking not required when agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, contrary the public interest. The provisions the APA that ordinarily require notice proposed rulemaking not apply here because the specific authority granted section 9833 the Code, section 734 ERISA, and section 2792 the PHS Act.  However, even the APA were applicable, the Secretaries have determined that would impracticable and contrary the public interest delay putting the provisions these interim final regulations place until full public notice and comment process was completed. noted above, numerous provisions the Affordable Care Act are applicable for plan years (in the individual market, policy years) beginning after September 23, 2010, six months after date enactment.  Had the Departments published notice proposed rulemaking, provided for 60-day comment period, and only then prepared final regulations, which would subject 60-day delay effective date, unlikely that would have been possible have final regulations effect before late September, when these requirements could effect for some plans policies.  Moreover, the requirements these interim final regulations require significant lead time order implement.  For example, the case the requirement under PHS Act section 2711 prohibiting overall lifetime dollar limits, these interim final regulations require that enrollment opportunity provided for individual whose coverage ended reason reaching lifetime limit later than the first day this requirement takes effect.  Preparations presumably would have made put such enrollment process place. the case requirements for emergency care under PHS Act section 2719A, plans and issuers need know how process charges out-of-network providers early the first plan policy year beginning after September 23, 2010.  With respect all the changes that would required made under these interim final regulations, whether adding coverage children with preexisting condition under PHS Act section 2704, determining the scope rescissions prohibited under PHS Act section 2712, group health plans and health insurance issuers have able take these changes into account establishing their premiums, and making other changes the designs plan policy benefits, and these premiums and plan policy changes would have receive necessary approvals advance the plan policy year question.       
Accordingly, order allow plans and health insurance coverage designed and implemented timely basis, regulations must published and available the public well advance the effective date the requirements the Affordable Care Act. not possible have full notice and comment process and publish final regulations the brief time between enactment the Affordable Care Act and the date regulations are needed.  
The Secretaries further find that issuance proposed regulations would not sufficient because the provisions the Affordable Care Act protect significant rights plan participants and beneficiaries and individuals covered individual health insurance policies and essential that participants, beneficiaries, insureds, plan sponsors, and issuers have certainty about their rights and responsibilities.  Proposed regulations are not binding and cannot provide the necessary certainty. contrast, the interim final regulations provide the public with opportunity for comment, but without delaying the effective date the regulations. 
For the foregoing reasons, the Departments have determined that impracticable and contrary the public interest engage full notice and comment rulemaking before putting these interim final regulations into effect, and that the public interest promulgate interim final regulations. 
IV.
 Economic Impact and Paperwork Burden 
Summary--Department Labor and Department Health and Human Services stated earlier this preamble, these interim final regulations implement PHS Act sections 2704 (prohibiting preexisting condition exclusions), 2711 (prohibiting lifetime and annual dollar limits benefits), 2712 (rules regarding rescissions), and 2719A (patient protections).  These interim final regulations also provide guidance the requirement provide enrollment opportunities individuals who reached lifetime limit.  PHS Act section 2704 regarding preexisting condition exclusions generally effective for plan years (in the individual market, policy years) beginning after January 2014.  However, with respect enrollees, including applicants for enrollment, who are under years age, this section effective for plan years beginning after September 23, 2010; the case individual health insurance coverage, for policy years beginning after September 23, 2010.14 The rest these provisions generally are effective for plan years (in the individual market, policy The Affordable Care Act adds Section 715 the Employee Retirement Income Security Act (ERISA) and section 9815 the Internal Revenue Code (the Code) make the provisions part title XXVII the PHS Act applicable group health plans, and health insurance issuers providing health insurance coverage connection with group health plans, under ERISA and the Code those provisions the PHS Act were included ERISA and the Code. Section 1255 the Affordable Care Act.  See also section 10103(e)-(f) the Affordable Care Act. 
years) beginning after September 23, 2010, which six months after the March 23, 2010 date enactment the Affordable Care Act. 
The Departments have crafted these interim final regulations secure the protections intended Congress the most economically efficient manner possible. accordance with OMB Circular A-4, they have quantified the benefits and costs where possible and provided qualitative discussion some the benefits and the costs that may stem from these interim final regulations. 	Executive Order 12866--Department Labor and Department Health and Human Services Under Executive Order 12866 (58 51735), significant regulatory actions are subject review the Office Management and Budget (OMB).  Section 3(f) the Executive Order defines significant regulatory action action that likely result rule (1) having annual effect the economy $100 million more any one year, adversely and materially affecting sector the economy, productivity, competition, jobs, the environment, public health safety, State, local tribal governments communities (also referred economically significant); (2) creating serious inconsistency otherwise interfering with action taken planned another agency; (3) materially altering the budgetary impacts entitlement grants, user fees, loan programs the rights and obligations recipients thereof; (4) raising novel legal policy issues arising out legal mandates, the President's priorities, the principles set forth the Executive Order.  OMB has determined that this rule significant within the meaning section 3(f)(1) the Executive Order, because likely 
have effect the economy $100 million any one year. Accordingly, OMB has reviewed these rules pursuant the Executive Order.  The Departments provide assessment the 
potential costs and benefits each regulatory provision below, summarized the following table. 
Table 1.1 Accounting Table 
TABLE 1.1--Accounting Table 
Benefits 
Qualitative: These patient protections are expected expand coverage for children with preexisting conditions and individuals who face rescissions, lifetime limits, and annual limits result high health care costs. Expanded coverage likely increase access health care, improve health outcomes, improve worker productivity, and reduce family financial strain and job lock. Many these benefits have distributional component, and promote equity, the sense that they will enjoyed those who are especially vulnerable result health problems and financial status. Choice physician will likely lead better, sustained patient-provider relationships, resulting decreased malpractice claims and improved medication adherence and health promotion. Removing referrals and prior authorizations for primary care, obstetrical and gynecological care, and emergency services likely reduce administrative and time burdens both patients and physicians, while improving health outcomes allowing quicker access medical services when necessary.  
Discount Period Costs  Estimate Year Dollar Rate Covered15 Annualized Monetized ($millions/year) 4.9 2010 2011-2013 
4.9 2010 2011-2013 
 Monetized costs are due requirement notify participants that exceeded their lifetime limit and were disenrolled from their plan coverage their right re-enroll the plan; requirement that group health plan health insurance issuer offering group individual health insurance coverage  must notify affected individual days before coverage may rescinded; and notice participants right choose any available participating primary care provider pediatrician their primary care provider, and increased protections for those participants seeking emergency services. 
Qualitative: the extent these patient protections increase access health care services, increased health care utilization and costs will result due increased uptake. Expanding coverage children with preexisting conditions and individuals subject rescissions will likely increase overall health care costs, given that these groups tend have high cost conditions and require more costly care than average.  
Transfers 
Qualitative: These patient protections create small transfer from those paying premiums the group market those obtaining the increased patient protections. the extent there risk pooling the individual market, similar transfer will occur. Need for Regulatory Action Preexisting condition exclusions discussed earlier this preamble, Section 2704 the PHS Act added the Affordable Care Act, prohibits group health plans and health insurance issuers offering group The Departments analysis extends 2013.  The analysis does not attempt estimate effects 2014 and beyond because the extensive changes provided for the Affordable Care Act sources coverage, rating rules, and the structure insurance markets make nearly impossible isolate the effects the provisions these interim final regulations. 
individual health insurance from imposing any preexisting condition exclusion.  This new protection applies children who are under age for plan years (in the individual market, policy years) beginning after September 23, 2010.  For individuals age and over, this provision applies for plan years (in the individual market, policy years) beginning after January 2014. 
Preexisting conditions affect millions Americans and include broad range conditions from heart disease  which affects one three adults16  cancer  which affects million Americans17 relatively minor conditions like hay fever, asthma, previous sports injuries.18
 Denials benefits coverage based preexisting condition make adequate health insurance unavailable millions Americans.  Before the enactment the Affordable Care Act, States, health insurance issuers the individual market could deny coverage, charge higher premiums, and/or deny benefits for preexisting condition.19 
These interim final regulations are necessary amend the Departments existing regulations implement this statutory provision, which was enacted Congress ensure that quality health coverage available more Americans without the imposition preexisting condition exclusion. Lifetime and annual limits discussed earlier this preamble, Section 2711 the PHS Act was added the Affordable Care Act prohibit group health plans and health insurance issuers offering group American Heart Association. Heart Disease and Stroke Statistics 2009 Update-at-a-Glance. 
http://www.americanheart.org/downloadable/heart/1240250946756LS1982%20Heart%20and%20Stroke%20Update.042009.pdf National Cancer Institute. Cancer Query System: Cancer Prevalence Database. 
http://srab.cancer.gov/prevalence/canques.html Pollitz Sorian How Accessible Individual Health Insurance for Consumers Less than Perfect Health? 
Kaiser Family Foundation, June 2001. Kaiser State Health Facts. http://statehealthfacts.org/comparetable.jsp?ind=353cat=7. 

individual health insurance coverage from imposing lifetime limits the dollar value health benefits. Annual limits also are prohibited, but the statute includes phase-in this provision before January 2014, that allows plans and issuers impose restricted annual limits the levels discussed earlier this preamble.   
These new protections ensure that patients are not confronted with devastating health costs because they have exhausted their health coverage when faced with serious medical condition. For example, one recent national survey, ten percent all cancer patients reported that they reached benefit limit their insurance policy and were forced seek alternative insurance coverage pay the remainder their treatment out-of-pocket. 
These interim final regulations are necessary amend the Departments existing regulations implement the statutory provisions with respect annual and lifetime limits that Congress enacted help ensure that more Americans with chronic, long-term, and/or expensive illnesses have access quality health coverage.  The provisions the regulations regarding restricted annual limits function type transition rule, providing for staged implementation and helping ensure against adverse impacts premiums the offering health coverage the marketplace.  For more detail about these provisions, see the discussion PHS Act Section 2711, Lifetime and Annual Limits, section II.B earlier this preamble. Rescission discussed earlier this preamble, Section 2712 the PHS Act was added the Affordable Care Act prohibit group health plans and health insurance issuers offering group individual health insurance coverage from rescinding coverage except the case fraud intentional misrepresentation material fact. USA Today/Kaiser Family Foundation/Harvard School Public Health. National Survey Households Affected Cancer. November 2006. 
Prior the Affordable Care Act, thousands Americans lost health coverage each year due rescission. According House Energy and Commerce Committee staff memorandum,21 rather than reviewing medical histories when applications are submitted, the policyholders become sick and file expensive claims, insurance companies then initiate investigations scrutinize the details the policyholder's application materials and medical records, and discrepancies, omissions, misrepresentations are found, the insurer rescinds the policies, returns the premiums, and refuses payment for medical services.  The Committee found some questionable practices this area including insurance companies rescinding coverage even when discrepancies are unintentional caused others, for conditions that are unknown policyholders, and for discrepancies unrelated the medical conditions for which patients sought medical care.  
When coverage rescission occurs, individuals health coverage retroactively cancelled, which means that the insurance company longer responsible for medical care claims that they had previously accepted and paid.  Rescissions can result significant financial hardship for affected individuals, because, most cases, the individuals have accumulated significant medical expenses. The NAIC Regulatory Framework Task Force collected data companies covering the period 2004-2008, and found that rescissions averaged 1.46 per thousand policies force.22  This estimate implies there are approximately 10,700 rescissions per year. 
These interim final regulations implement the statutory provision enacted Congress protect the most vulnerable Americans, those that incur substantial medical expenses due Terminations Individual Health Insurance Policies Insurance Companies, Hearing before the House Comm. Energy and Commerce, Subcommittee Oversight and Investigations, June 16, 2009) (supplemental memorandum) http://energycommerce.house.gov/Press_111/20090616/rescission_supplemental.pdf. NAIC Rescission Data Call, December 17, 2009, p.1. 
serious medical condition, from financial devastation ensuring that such individuals not unjustly lose health coverage rescission. Patient Protections discussed earlier this preamble, Section 2719A the PHS Act was added the Affordable Care Act require group health plans and health insurance issuers offering group individual health insurance coverage ensure choice health care professionals and greater access benefits for emergency services. discussed more detail below, provider choice strong predictor patient trust provider, and patient-provider trust can increase health promotion and therapeutic effects.23 Studies also have found that patients tend experience better quality health care they have long-term relationships with their health care provider.24 
The emergency care provisions PHS Act section 2719A require (1) non-grandfathered group health plans and health insurance issuers that cover emergency services cover such services without prior authorization and without regard whether the health care provider providing the services participating network provider, and (2) copayments and coinsurance for out-of-network emergency care not exceed the cost-sharing requirements that would have been imposed the services were provided in-network.  These provisions will ensure that patients get emergency care when they need it, especially situations where prior authorization cannot obtained due exigent circumstances in-network provider not available provide the services. also will protect patients from the substantial financial burden that can Piette, John, al., The Role Patient-Physician Trust Moderating Medication Nonadherence Due Cost Pressures. Archives Internal Medicine 165, August (2005) and Roberts, Kathleen J., Physician-Patient Relationships, Patient Satisfaction, and Antiretroviral Medication Adherence Among HIV-Infected Adults Attending Public Health Clinic. AIDS Patient Care and STDs 16.1 (2002). Blewett, Lynn, al., When Usual Source Care and Usual Provider Matter: Adult Prevention and Screening Services. Journal General Internal Medicine 23.9 (2008). 
imposed when differing copayment coinsurance arrangements apply in-network and out-ofnetwork emergency care. 
This regulation necessary implement the statutory provision enacted Congress provide these essential patient protections. 	PHS Act Section 2704, Prohibition Preexisting Condition Exclusions (26 CFR 54.98152704T, CFR 2590.715-2704, CFR 147.108) Summary discussed earlier this preamble, section 1201 the Affordable Care Act adds new PHS Act section 2704, which amends the HIPAA rules relating preexisting condition exclusions provide that group health plan and health insurance issuer offering group individual health insurance coverage may not impose any preexisting condition exclusion.  The HIPAA rules (in effect prior the effective date these amendments) apply only group health plans and group health insurance coverage, and permit limited exclusions coverage based preexisting condition under certain circumstances.  The Affordable Care Act and these interim final regulations prohibit any preexisting condition exclusions imposed group health plans group health insurance coverage and extends this protection individual health insurance coverage. This prohibition generally effective with respect plan years (in the individual market, policy years) beginning after January 2014, but for enrollees who are under years age, this prohibition becomes effective for plan years (in the individual market, policy years) beginning after September 23, 2010.    
Under the statute and these interim final regulations, grandfathered health plan that group health plan group health insurance coverage must comply with the prohibition against preexisting condition exclusions; however, grandfathered health plan that individual health insurance coverage not required comply with PHS Act section 2704. this section, the Departments estimate the likely effects these interim final regulations. Beginning with the population individuals age 0-18, the number individuals potentially affected estimated several steps.  First, the number children who have preexisting conditions that might cause them excluded from coverage estimated.  Second, range take-up rates used estimate the number children who might newly covered after these interim final regulations are implemented. addition, the potential cost implications are discussed. Estimated Number Affected Individuals the individual market, those applying for insurance will longer face exclusions denials coverage based preexisting condition exclusion they are under the age 19. addition, children covered non-grandfathered individual coverage with rider exclusion period that excludes coverage for preexisting condition will gain coverage for that condition. the group market, participants and dependents who are under years old and have experienced lapse coverage will longer face twelve-month exclusion for preexisting conditions. 
The Departments estimates this section are based the 2004-2006 Medical Expenditure Panel Survey Household Component (MEPS-HC) which was projected 2010 and calibrated consistent with the National Health Accounts projections.  The analysis tabulated counts and costs for persons under age age, health status, and insurance status.   
There are two main categories children who are most likely directly affected these interim final regulations: first, children who have preexisting condition and who are uninsured; second, children who are covered individual insurance with rider excluding coverage for preexisting condition preexisting condition exclusion period.  For the latter category, obtaining coverage for the preexisting condition may require terminating the childs existing policy and beginning new one, because individual health insurance coverage that grandfathered health plan not required comply with PHS Act section 2704 these interim final regulations. difficult estimate precisely how many uninsured children have preexisting condition that would cause them denied coverage for that condition they were apply.  Information whether individuals have preexisting condition for the purpose obtaining health insurance not collected any major population-based survey. its annual survey market practices, Americas Health Insurance Plans (AHIP) estimated that 429,464 applications for children were medically underwritten, and 20,747, 4.8 percent, were denied.25 The survey does not measure the number applicants who did not make through underwriting process, nor does measure the applicants prior insurance status, and therefore, while useful, does not provide direct estimates the number proportion uninsured children who would denied coverage based preexisting condition. Thus, the Departments use proxies for preexisting conditions available nationally representative surveys estimate the universe potentially eligible individuals. 
The Departments estimate that 2010 there are approximately 78.0 million children under the age the United States, whom estimated 19.4 million report fair poor health take three more prescription medications.  The Departments assume that these children have preexisting condition.  Whether not the statute and these interim final regulations are likely affect these children depends their own and their parents insurance status. the 19.4 million children that potentially have preexisting condition, 10.2 million AHIP Center for Health Policy Research. Individual Health Insurance 2009. http://www.ahipresearch.org/pdfs/2009IndividualMarketSurveyFinalReport.pdf 
already have employer-sponsored insurance (ESI), 760,000 have individual coverage, and 7.9 million have public other coverage, leaving 540,000 uninsured children with preexisting conditions.26  The Departments assume that this group 540,000 uninsured children with preexisting condition would denied coverage for that condition altogether they were apply. 
The likelihood that uninsured child with preexisting condition will gain coverage due these interim final regulations will likely vary the insurance status the childs parent. shown Table 2.1, approximately one-half the 540,000 uninsured children who the Departments estimate have preexisting condition live with parent who also uninsured and not offered ESI. additional 190,000 have parent who covered ESI, and 60,000 children have parent who was offered ESI but did not accept the offer (and the insurance status the parent unknown). Table 2.1 Estimated number uninsured children with preexisting conditions, parents insurance status, 2010 
Parents insurance status  Number children   
Parent has employer-sponsored insurance (ESI)  190,000  
Parent offered ESI  60,000  
Parent has individual market insurance  10,000  
Parent does not have private insurance*  270,000 parent  20,000  
Total  540,000 Primarily parents who are uninsured, but also including small number who have public coverage. Total not the sum the components due rounding. 
Source: Departments analysis MEPS-HC data, 2004-2006, trended forward 2010.    

The group most likely affected these interim final regulations uninsured children whose parents have purchased non-group coverage, whom there are estimated These estimates are from the Departments analysis the 2004-2006 Medical Expenditure Panel Survey, trended forward 2010. 
10,000. These parents have demonstrated strong preference for coverage being willing pay for non-group premium for themselves, but their child uninsured.  Although the Departments cannot know with any certainty, quite plausible that the child uninsured because the insurer refused sell coverage the child due preexisting condition. individual market insurance policy does not change substantially and retains its grandfather status, the insurer not required add child with preexisting condition.  However, the parent terminates the existing policy and purchases new policy (which quite plausible given the high prevalence churning the individual insurance market), then the new policy will required cover the child, and substantial proportion these children could gain access coverage due these interim final regulations.27 the other extreme, roughly 190,000 uninsured children with preexisting condition have parent with ESI. possible that these children are uninsured because their parents ESI does not offer dependent coverage. also possible that the parent could not afford the employee portion family plan premium.  These interim final regulations are not likely have much effect coverage for children these circumstances. very small subset uninsured children whose parents have ESI could have had preexisting exclusion period before coverage provided for services treat that condition.  Under the statute and these interim final regulations, there would longer such period, making coverage desirable. Such children may affected this provision.   
Approximately 60,000 uninsured children with preexisting condition have parents who were offered ESI but did not accept that offer. also seems unlikely that these interim final regulations will have much effect that group, because almost all those parents could have Adele Kirk. The Individual Insurance Market: Building Block for Health Care Reform? Health Care Financing Organization Research Synthesis. May 2008. 
chosen cover themselves, and potentially their child, through ESI the absence these interim final regulations. between these extremes are the approximately 270,000 uninsured children whose parents are themselves uninsured.  Many these parents have low moderate income, and many may not able afford insurance.28  However, some these parents might purchase policy for their child with preexisting condition were available them.   
While relatively easy hypothesize about the relationship between parental insurance status and the likelihood that child will newly covered, much more difficult estimate with any precision the take-up rates for each parental coverage category.  Acknowledging substantial uncertainty, based the discussion above, the Departments midrange estimate that percent uninsured children whose parents have individual coverage will newly insured, percent uninsured children whose parents are uninsured will newly insured, and that very few children whose parents have ESI, are offered ESI, who not live with parent will become covered result these interim final regulations.29 For the high-end estimate, the Departments assume that the percent and percent assumptions increase percent and percent, respectively.  For the low-end assumption, they assume that they decrease percent and percent. Approximately two-thirds the uninsured are families with income below 200 percent the Federal Poverty Level. Current Population Survey, March 2008. The Departments researched the literature attempt provide support for the take-up rate assumptions made here.  There substantial literature take-up rates among employees who are offered ESI, take-up rates public coverage among people eligible for Medicaid and Childrens Health Insurance Program, and some work the purchasing behavior people who are choosing between being uninsured and buying individual insurance (Aizer, 2006; Kronson, 2009; KFF, 2007; Bernard and Selden, 2006; Sommers and Krimmel, 2008).  This work shows that take-up rates are very high for workers who are offered ESI, but that approximately percent people without ESI purchase individual coverage.  This literature can also used estimate the price-elasticity demand, has been used the Congressional Budget Office its estimates the effects the Affordable Care Act (http://www.cbo.gov/ftpdocs/87xx/doc8712/10-31-HealthInsurModel.pdf)  However, none this work very helpful estimating the level take-up the Departments should expect parents are given the opportunity purchase coverage for their children with preexisting conditions. the absence strong empirical guidance, the Departments consulted with experts, used their best judgment, and provide wide range for our assumptions. shown Table 2.2, the Departments mid-range estimate that 51,000 uninsured children with preexisting conditions could gain coverage result these interim final regulations. the low end the range, this could 31,000 and the high end the range, could 72,000. Given that most ESI already covers children with preexisting conditions, almost all these children newly gaining coverage are expected gain individual coverage.30 Table 2.2 Estimated number uninsured children gaining coverage  
Gain Employer-Sponsored Insurance  Gain Individual Market Insurance  Total  
High Take-Up  10,000  62,000  72,000  
Medium Take-Up  6,000  45,000  51,000  
Low take-Up  2,000  29,000  31,000  

Source: Departments analysis 2004-2006 MEPS-HC, trended forward 2010.  
The other group children who will affected these interim final regulations children who already have non-group insurance coverage, but who are covered with condition waiver that excludes coverage imposes exclusion period for coverage preexisting condition. After the implementation these interim final regulations, children whose parents purchase individual coverage will not subject condition waivers preexisting condition exclusion periods. The Departments estimate that there are 90,000 children covered individual insurance with condition waiver (or with period during which coverage for preexisting condition excluded).31  The individual market issuers who insure these estimated 90,000 children with condition waiver may decide remain grandfathered health plans and For those parents who turned down offer ESI and whose insurance status not known, the Departments assume that half the children who takeup coverage join ESI, and half join private insurance plan the individual insurance market. The 2009 AHIP survey for individual coverage estimated that approximately 2.7 percent children with individual coverage are covered with condition waiver.  This percent estimate was applied the MEPS-based estimate that there are approximately 3.3 million children covered individual insurance. separate analysis MEPS the Departments similarly found about 90,000 children with preexisting condition (defined being fair poor health taking three more prescription medications) had low actuarial value coverage for their condition. 
thus these children will not directly affected these interim final regulations.  However, the parents those children could choose switch from individual policy that grandfathered health plan new policy that not grandfathered, although the premium that they pay for such coverage could increase. Similarly, for those children currently covered but preexisting condition exclusion period, curtailing the exclusion period would require the termination the current plan and purchase policy after September 23, 2010. Benefits 
The benefits PHS Act Section 2704 and these interim final regulations are expected amply justify the costs.  These interim final regulations will expand and improve coverage for those under the age with preexisting conditions.  This will likely increase access health care, improve health outcomes, and reduce family financial strain and job lock, described below. 
Numerous studies confirm that when children become insured, they are better able access health care.  Uninsured children are six times more likely than insured children lack usual site care.32 contrast, one year after enrollment health insurance, nearly every child one study had regular physician and the percentage children who saw dentist increased approximately percent.33 Insured children also experience fewer unmet needs and delays care. one study, percent the children years age faced some unmet need delayed physician care the prior months, whereas months after insurance enrollment, only 3.7 percent reported such delays care deficiencies.34 Childrens Health, Why Health Insurance Matters. Kaiser Commission Medicaid and the Uninsured, 
available at: http://www.kff.org/uninsured/loader.cfm?url=/commonspot/security/getfile.cfmPageID=14132 Ibid. Keane, Christopher al. The Impact Childrens Health Insurance Program Age. Pediatrics 104:5 (1999), 
available at: http://pediatrics.aappublications.org/cgi/reprint/104/5/1051. 

With regular access health care, childrens health and well-being are likely improve. When children are sick and without health insurance, they may, out financial necessity, have forgo treatment; insurance improves the likelihood that children get timely and appropriate health care services.35  Insured children are less likely experience avoidable hospital stays than uninsured children36 and, when hospitalized, insured children are less risk dying.37  When children are insured, not only improves their health status, but also confers corollary benefits. Children without health insurance may not allowed participate many physical activities peers because parents are concerned about the financial impacts unintentional injury. One study determined that percent uninsured children had various activity restrictions (e.g., related sports biking).  However, almost all these restrictions were removed once they gained insurance.38  And health insurance and access care improve school attendance. evaluation initiative designed connect children Healthy Kids, insurance program piloted Santa Clara County, California for children low-income families, found that the proportion children missing three more school days the previous month decreased from percent among non-enrollees percent after enrollment the insurance
program. addition their benefits relating access care, health, and well-being children, these interim final regulations are likely lower families out pocket health care spending.  Some families would face the possibility paying high out-of-pocket expenses for health care Uninsured children are least percent more likely than insured children not receive medical care for common childhood conditions like sore throats, ear infections, and asthma. Ibid. Ibid. Bernstein, Jill al. How Does Insurance Coverage Improve Health Outcomes? Mathematica Policy Research (2010), available: http://www.mathematica-mpr.com/publications/PDFs/Health/Reformhealthcare_IB1.pdf Childrens Health, Why Health Insurance Matters. Kaiser Commission Medicaid and the Uninsured, available at: http://www.kff.org/uninsured/loader.cfm?url=/commonspot/security/getfile.cfmPageID=14132 Howell, Embry and Trenholm, Christopher Santa Clara County Childrens Health  Initiative Improves Childrens Health. Mathematica Policy Research and The Urban Institute  (2007), available at: http://www.mathematicampr.com/publications/PDFs/CHIimproves.pdf 
for children under who could not obtain insurance because preexisting condition.  Further, expanded insurance coverage should reduce the number medical bankruptcies.40 cases where medical expenses are substantial, families may longer need spend down their assets order qualify for Medicaid and other public assistance programs.  Approximately States offer Medicaid eligibility adults and children who spend-down State-established medically needy income limits.41  Eight percent Medicaid beneficiaries qualify via spend-down yet this group accounts for disproportionately high percentage Medicaid spending nationally (14 percent), due the fact that coverage kicks when individuals medical costs are high.42  Despite the fact that medically needy populations become eligible account onerous medical bills, this group especially vulnerable losing coverage because States are not required cover this group. For example, 2003, when Oklahoma eliminated its medically needy program due budget shortfall, estimated 800 children lost coverage.43 Such coverage interruptions likely contribute higher rates uncompensated care  the primary source for which Federal funding.44  Reduced reliance these programs under these interim final regulations will benefit State and Federal governments and, extension, taxpayers. addition, these interim final regulations may reduce instances job lock situations which workers are unable change jobs due concerns regarding health insurance coverage for their children.45  For example, under the Affordable Care Act and these interim Himmelstein, D., Warren, E., Thorne, D., and Woolhandler, Illness and Injury Contributors Bankruptcy, Health Affairs W5-63, February (2005); Himmelstein, D., Thorne, D., Warren, E., Woolhandler, Medical Bankruptcy the United States, 2007: The Results National Study, The American Journal Medicine June (2009). http://www.statehealthfacts.org/comparereport.jsp?rep=60cat=4 Page http://www.kff.org/medicaid/loader.cfm?url=/commonspot/security/getfile.cfmPageID=14325 Page http://www.nashp.org/sites/default/files/shpmonitor_medicallyneedy.pdf Page http://www.kff.org/uninsured/upload/The-Cost-of-Care-for-the-Uninsured-What-Do-We-Spend-WhoPays-and-What-Would-Full-Coverage-Add-to-Medical-Spending.pdf45 CEA report suggests that the overall cost job-lock could $3.7 billion annually, which about percent affected workers wages.  While these interim final regulations may only have impact small percentage 
final regulations, someone currently insured through the group market with less than months continuous coverage may more willing leave her job and become self-employed entrepreneur she has child under age with preexisting condition, because her child now will able obtain immediate coverage for the preexisting condition the individual market.  Similarly, even worker with more than months continuous coverage who already protected HIPAA may more likely consider switching firms and changing policies because would not have worry that his childs preexisting condition would excluded for months.46  While the total reduction job-lock may small, the impact those families with children with preexisting conditions may significant.  The effect these interim final regulations job-lock discussed further the summary section below.  
Executive Order 12866 explicitly requires agencies take account distributive impacts and equity.  Requiring health insurers provide coverage children with preexisting conditions will, described below, result small increase premium for relatively healthy adults and children, and large increase health and financial security for children with preexisting conditions and their parents.  This transfer meaningful increase equity, and benefit these interim final regulations. Costs and Transfers Children with preexisting conditions have high health care costs  approximately three 
all individuals affected job-lock could still have large dollar impact for those affected.   Council Economic Advisors Report, The Economic Case for Health Reform (June 2009), http://www.whitehouse.gov/assets/documents/CEA_Health_Care_Report.pdf. 2006 study found evidence that the introduction HIPAA, which reduced preexisting condition exclusions, had any impact job lock, but HIPAA still allows 12-month preexisting condition exclusion meaning that for conditions that need immediate care someone could still effectively uninsured for year. contrast, the provisions the statute and these interim final regulations would not allow any preexisting condition exclusion.  See e.g., Paul Fronstin, Health Insurance Portability and Job Lock: Findings from the 1998 Health Confidence Survey, Employee Benefit Research Institute Notes, Volume 19, Number pages 4-6 (Aug. 1998) and Anna Sanzde-Galdeano, Job-Lock and Public Policy: Clintons Second



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