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Health Care Reform Developments Week of August 11, 2014[1]
1. August 12, 2014
Health Care Reform Update: Week of August 11
CMS Issues Guidance on Non-Federal Governmental Plans Opt-Out
On July 21, 2014, the Department of Health and Human Services (HHS) Centers for Medicare &
Medicaid Services (CMS) issued sub-regulatory guidance concerning the new electronic process for
non-federal governmental plans to elect to exempt those plans from certain Public Health Services
Act (PHSA) requirements. This guidance provides details regarding the updated procedures and
requirements to file the opt-out election electronically.
Background
Prior to enactment of the Patient Protection and Affordable Care Act (PPACA), plans sponsors of
self-funded non-federal government group health plans (i.e., those sponsored by state and local
governments) could elect to opt-out of seven provisions of Title XXVII of the PHSA. Under
PPACA, however, those plans sponsors were no longer permitted to opt-out of three of those
provisions—those related to HIPAA portability requirements. As a result, such opt-out elections have
been limited to the remaining four PHSA requirements, including:
• Standards relating to benefits for newborns and mothers (Newborns’ and Mothers’ Health
Protection Act);
• Parity in the application of certain limits to mental health and substance use disorder benefits
(including requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA));
• Required coverage for reconstructive surgery following mastectomies (Women’s Health and
Cancer Rights Act); and
• Coverage of dependent students on a medically necessary leave of absence (Michelle’s Law).
HHS recently released final regulations, in which it explained the effective date of the changes in the
opt-out process for:
• Plans not subject to a collective bargaining agreement or plans subject to a collective bargaining
agreement ratified on or after March 23, 2010—effective for plan years beginning on or after
September 23, 2010; and
• Plans subject to a collective bargaining agreement ratified before March 23, 2010 and that had
opted out of the three HIPAA portability requirements—effective the first plan year following the
expiration of the last plan year governed by the collective bargaining agreement.
In addition, HHS announced it would no longer accept opt-out elections via U.S. Mail or facsimile
after December 31, 2014, and all future opt-out elections would need to be filed electronically with
CMS. Further information regarding the guidance provided in the HHS regulations can be found in
2. August 12, 2014
the Health Care Reform Update Article for the Week of July 7, entitled HHS Issues Final Regulations
Addressing Non-Federal Governmental Plans Opt-Out.
CMS Electronic Filing Guidelines
Under the new electronic opt-out process, a plan sponsor of a self-funded non-federal government
group health plan will be required to go through multiple steps in order to register for an Enterprise
Identity Management (EIDM) User ID, and that User ID will then be used in order to allow the
individual to register and later submit opt-outs through the “Non-Fed Module” within the Health
Insurance Oversight System (HIOS). The multi-step process is outlined within the sub-regulatory
guidance found here.
As part of the filing process, the plan filer must choose the user role that applies to its submittal—
either as a “submitter” (person who completes the application and submits the documents) or as a
“role approver administrator” (person who confirms submitter role requests). According to CMS
directions, plan sponsors first should register as a “role approver administrator” in HIOS, so they can
then register for the “submitter role.” In addition, CMS has published an HIOS user manual to guide
non-federal governmental plans in accessing the HIOS system.
Plan sponsors submitting an opt-out election must provide a certification by entering their electronic
signature, which includes title, first name and last name. The individual “signing” the certification
should be the Non-Fed Module submitter for the online HIOS submission.
A complete opt-out election consists of (1) the election document; (2) a signed certification; and (3) a
copy of the required notice of the opt-out election to plan enrollees in Word or PDF format (unless
the filing is for a renewal of an existing exemption). That notice must inform each affected enrollee
in writing of the opt-out election and explain the consequences of that election using either the CMS
model notice or by complying with the notice requirements in the final regulations. The notice can be
provided by being prominently printed in the summary plan description or equivalent document
provided to enrollees at the time of enrollment and annually, or delivered by email in accordance with
Department of Labor electronic disclosure safe harbor guidelines.
Self-funded non-federal government group health plans not governed by a collective bargaining
agreement must file an election with CMS before the first day of the plan year. For plans governed
by a collective bargaining agreement, the election must be filed with CMS before the first day of the
plan year, or by the 45th
day after the latest applicable date (as specified in the final regulation) if the
45th
day falls on or after the first day of the plan year.
Willis’ National Legal & Research Group will continue to review and provide timely updates on these
and other related changes in Health Care Reform that affect employers.
This information is not intended to represent legal or tax advice and has been prepared solely for informational
purposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.