Capital Checkup

 

November 25, 2008

Agencies Publish Final Rules on Newborns' and Mothers' Health Protection Act

The U.S. Department of Labor, the U.S. Department of Health and Human Services, and the U.S. Department of the Treasury have published final rules on the Newborns' and Mothers' Health Protection Act of 1996 (Newborns' law).1 These rules become effective December 19, 2008, and apply to plan years beginning on or after January 1, 2009. These rules apply to all plans covered by the Employee Retirement Income Security Act (ERISA), including multiemployer plans, as well as nonfederal governmental plans and church plans. Self-insured governmental plans may opt out annually.2

Brief Background

The Newborns' law requires group health plans and health insurance issuers that provide coverage for hospital stays in connection with childbirth to not restrict these benefits to less than 48 hours following a vaginal delivery, or less than 96 hours following a cesarean section. Interim final rules were published in October 1998. The final rules are almost identical to the interim rules (with only minor technical changes).

Implications for Plan Sponsors

To the extent that plans are in compliance with the interim rules, there should not be any need to make changes now to comply. Nevertheless, since it has been 10 years since the interim rules were published, plan sponsors should take a moment to review some of the compliance issues that are contained in the Newborns' law, the interim final rules and the final rules. A few key issues are discussed below:

  • Attending Providers & Compensation Incentives  Despite the minimum standard set for hospital lengths of stay in connection with childbirth, an attending provider, in consultation with the mother, may discharge a mother or newborn earlier than the 48- or 96-hour time periods. Plans are prohibited from inducing providers to provide care in a manner that is inconsistent with the law. This could include compensation arrangements that encourage providers to discharge a mother and/or newborn within a shorter period than the minimums contained in the law. The agencies declined to provide specific examples of the compensation arrangements that would violate the law, stating that the variety and complexity of compensation arrangements limit the value of setting out examples. If a plan has special compensation arrangements related to maternity hospital stays, these programs should be evaluated on a case-by-case basis.
  • Precertification  Plans are prohibited from requiring a provider to obtain authorization (i.e., precertification of medical necessity) from the plan in order to prescribe the minimum length of stay required under the law. Plans can require precertification for any portion of the stay after the minimum requirements. Also, a plan may require that a participant provide advance notice of a hospital stay for childbirth in order to obtain more favorable cost-sharing. Such a requirement cannot be used to deny benefits for any portion of the minimum length of stay required under the law based on a medical necessity determination.
  • State Law Preemption  The Newborns' law has a unique preemption provision that says the law will not apply to insured plans, if there is a state law concerning length of stays in connection with childbirth that meets certain criteria set out in the regulations. If a state law meets the criteria, then that law - not the federal one - applies to the insured plan. Self-insured plans or plan options must comply with the federal Newborns' law requirements (with the exception of self-insured nonfederal governmental plans that opt out).
  • Disclosure Requirements  ERISA plans must disclose the requirements of the Newborns' law under special Summary Plan Description (SPD) content regulations. These SPD regulations require that self-insured plans describe the federal Newborns' law requirement.3 In addition, plans that are insured (or that have insured options) must describe the state law if it applies instead of the federal requirements. Governmental plans must also disclose information that notifies participants and beneficiaries of their rights under the law in documents that the plan uses to inform participants about benefits and benefit changes. Specific language for the statement of rights is included in the Public Health Service Act portion of the regulations.4 This language does not have to be used if a governmental plan has opted out of the Newborns' law or is insured and is regulated under a state law.

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As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for authoritative advice on the interpretation and application of the Newborns' law. The Segal Company is available to review the impact of the final rules on a plan.

1
The rules were published in the October 20, 2008 issue of the Federal Register, 73 Fed. Reg. 62410. (Click on the following text to return to the Capital Checkup.)
2
Information about the opt-out is available on the following page of the Centers for Medicare & Medicaid Services Web site: http://www.cms.hhs.gov/SelfFundedNonFedGovPlans/. (Click on the following text to return to the Capital Checkup.)
3
The DOL has published on its Web site sample language that plans can incorporate into their SPDs: http://www.dol.gov/ebsa/pdf/CAGAppD.pdf (Click on the following text to return to the Capital Checkup.)
4
For the language for governmental plans, see 73 Fed. Reg. 62427 (October 20, 2008); 42 CFR 146.130(d)(2). (Click on the following text to return to the Capital Checkup.)

Capital Checkup is The Segal Company's periodic electronic newsletter summarizing activity with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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