Final Rules for Group Health Plans and Health Insurance Issuers Under the Newborns' and Mothers' Health Protection Act, 62410-62429 [E8-24666]
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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
Service, Department of the Treasury, at
(202) 622–6080; or Adam Shaw, Centers
for Medicare & Medicaid Services,
Department of Health and Human
Services, at (877) 267–2323 extension
61091.
Customer service information:
Individuals interested in obtaining
copies of Department of Labor
publications concerning health care
laws may request copies by calling the
EBSA Toll-Free Hotline at 1–866–444–
EBSA (3272) or may request a copy of
CMS’s publication entitled ‘‘Protecting
Your Health Insurance Coverage’’ by
calling 1–800–633–4227. These
regulations as well as other information
on the Newborns’ and Mothers’ Health
Protection Act and other health care
laws are also available on the
Department of Labor’s Web site (https://
www.dol.gov/ebsa), including the
interactive web pages, Health Elaws.
SUPPLEMENTARY INFORMATION:
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9427]
RIN 1545–BG82
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
RIN 1210–AA63
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
45 CFR Parts 144, 146, and 148
RIN 0938–AI17
Final Rules for Group Health Plans and
Health Insurance Issuers Under the
Newborns’ and Mothers’ Health
Protection Act
Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration,
Department of Labor; Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services.
ACTION: Final rules.
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AGENCIES:
SUMMARY: This document contains final
rules for group health plans and health
insurance issuers concerning hospital
lengths of stay for mothers and
newborns following childbirth,
pursuant to the Newborns’ and Mothers’
Health Protection Act of 1996 and the
Taxpayer Relief Act of 1997.
DATES: Effective Date: These final
regulations are effective December 19,
2008.
Applicability Dates: Group market
rules. These final regulations for the
group market apply to group health
plans and group health insurance
issuers for plan years beginning on or
after January 1, 2009.
Individual market rules. These final
regulations for the individual market
apply with respect to health insurance
coverage offered, sold, issued, renewed,
in effect, or operated in the individual
market on or after January 1, 2009.
FOR FURTHER INFORMATION CONTACT:
Amy Turner or Beth Baum, Employee
Benefits Security Administration,
Department of Labor, at (202) 693–8335;
Russ Weinheimer, Internal Revenue
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I. Background
The Newborns’ and Mothers’ Health
Protection Act of 1996 (Newborns’ Act),
Public Law 104–204, was enacted on
September 26, 1996. The rules
contained in this document implement
changes made to the Employee
Retirement Income Security Act of 1974
(ERISA) and the Public Health Service
Act (PHS Act) made by the Newborns’
Act, and parallel changes to the Internal
Revenue Code of 1986 (Code) enacted as
part of the Taxpayer Relief Act of 1997
(TRA ’97). The Newborns’ Act was
enacted to provide protections for
mothers and their newborn children
with regard to hospital lengths of stay
following childbirth. Interim final rules
implementing the group and individual
market provisions of the Newborns’ Act
were published in the Federal Register
on October 27, 1998 (63 FR 57546) (the
interim final rules).
These regulations being published
today in the Federal Register finalize
the interim final rules. The final
regulations implementing the group
market provisions of the Newborns’ Act
are issued jointly by the Secretaries of
the Treasury, Labor, and HHS.1 The
individual market final regulations are
issued solely by HHS.2
II. Overview of the Regulations
Section 9811 of the Code, section 711
of ERISA, and sections 2704 and 2751
of the PHS Act (the Newborns’ Act
provisions) provide a general rule under
which a group health plan and a health
insurance issuer may not restrict
1 26 CFR 54.9811–1, 29 CFR 2590.711, 45 CFR
146.130.
2 45 CFR 148.170.
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mothers’ and newborns’ benefits for a
hospital length of stay in connection
with childbirth to less than 48 hours
following a vaginal delivery or 96 hours
following a delivery by cesarean section.
The interim final rule—
• Provided that the attending
provider makes the determination that
an admission is in connection with
childbirth;
• Determined when the hospital stay
begins for purposes of application of the
general rule;
• Provided an exception to the 48hour (or 96-hour) general rule if the
attending provider decides, in
consultation with the mother, to
discharge the mother or her newborn
earlier;
• Clarified the application of
authorization and precertification
requirements with respect to the 48hour (or 96-hour) stay;
• Explained the application of benefit
restrictions and cost-sharing rules with
respect to the 48-hour (or 96-hour) stay;
• Clarified the prohibitions with
respect to a plan or issuer offering
mothers incentives or disincentives to
encourage less than the 48-hour (or 96hour) stay;
• Clarified the prohibitions against
incentives and penalties with respect to
attending providers; and
• Included the statutory notice
provisions under ERISA and the PHS
Act. In general, these final regulations
do not change the interim final rules.
However, the text of these final
regulations incorporates a clarifying
statement from the preamble of the
interim final rules that the definition of
attending provider does not include a
plan, hospital, managed care
organization, or other issuer. The text
also makes a small clarification with
respect to state law applicability.
In addition, these final regulations
make minor clarifications to the notice
requirements for nonfederal
governmental plans. The interim final
rules specified that the notice of postchildbirth hospitalization benefits must
be included in the plan document that
described plan benefits to participants
and beneficiaries. These final
regulations specify that any notice a
nonfederal governmental plan must
provide under these regulations can be
included either in the plan document
that describes benefits, or in the type of
document the plan generally uses to
inform participants and beneficiaries of
plan benefit changes. These final
regulations also specify that any time a
plan distributes one or both of these
documents after providing the initial
notice, the applicable statement must
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appear in one or both of these
documents.
Hospital Length of Stay
The interim final rules and these final
regulations provide that when a delivery
occurs in the hospital, the stay begins at
the time of delivery (or, in the case of
multiple births, at the time of the last
delivery) rather than at the time of
admission or onset of labor. Also, the
interim final rules and these final
regulations provide that when a delivery
occurs outside of the hospital, the stay
begins at the time the mother or
newborn is admitted (rather than at the
time of delivery).
Some comments expressed concern
that this rule somehow required birthing
centers or other non-hospital facilities to
extend the right to stay to more than 24
hours. These comments noted that such
extended stays may violate local
regulations or otherwise conflict with
the operations of such facilities. The
statute and these final regulations do
not require hospitals or other facilities
to provide particular lengths of stay, but
instead require group health plans and
health insurance issuers to provide
benefits for particular hospital lengths
of stay.
A comment recommended that if a
delivery was planned for outside of a
hospital, any following admission in
response to complications resulting
from that delivery should be excluded
from the provisions providing for
particular lengths of stay. These final
regulations do not distinguish between
a delivery that was planned for outside
of the hospital and other deliveries
occurring outside of a hospital.
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Definition of Attending Provider
The mandatory coverage period
provisions are not violated if the
attending provider, in consultation with
the mother, decides to discharge the
mother or newborn earlier. Under the
interim final rules and these final
regulations, the attending provider is
defined by a functional analysis of state
licensure rules and the actual
performance of care. Under this
definition, the attending provider is
restricted to an individual who is
licensed under applicable state law to
provide maternal or pediatric care and
who is directly responsible for
providing such care to a mother or
newborn child. While the preamble to
the interim final rules noted that this
definition could include a nurse
midwife or physician assistant, the
regulation itself does not provide a list
of titles or positions that qualify as
attending providers.
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Some comments requested that
additional titles, such as pediatric nurse
practitioners, or nurse practitioners, be
specifically mentioned in the definition.
While positions with these titles may
meet the definition in many cases, as
noted above, the language of the
regulation takes a functional approach
and does not provide a list of titles or
positions that qualify as attending
providers. This functional approach is
more useful in addressing who the
attending provider is on an ongoing
basis, as specific position titles and
responsibilities may vary from location
to location as well as over time.
It was also suggested that the text of
the final regulations incorporate a
clarifying statement from the preamble
of the interim final rules that the
definition of attending provider does
not include a plan, hospital, managed
care organization, or other issuer. These
final regulations adopt this suggestion.
Compensation of Attending Provider
Several comments addressed the
provisions in the interim final rules that
relate to the compensation of physicians
and other attending providers. These
provisions prohibit plans and issuers
from penalizing attending providers
who provide care in accordance with
the regulations, and prohibit plans and
issuers from inducing attending
providers to provide care in a manner
that is inconsistent with the regulations.
At the same time, the statute specifies
that plans and issuers are still free to
negotiate with attending providers the
level and type of compensation for care
furnished in accordance with the
regulations.
The comments requested greater
specificity in the final regulations for
distinguishing between the types of
compensation arrangements that are
permissible under the negotiation
provision and those that are
impermissible under the prohibitions
against penalties and inducements. One
comment suggested that it is clear that
a bonus arrangement for obstetricians
and gynecologists contingent on the
percentage of discharges within 24
hours would not be permitted. The
comment requested confirmation that
arrangements with a more general focus
would be permitted, such as a global
payment for prenatal care and
childbirth, or a bonus for a multispecialty group including obstetricians
and gynecologists based on the
utilization for all patients served by the
group. Another comment expressed a
concern about whether capitated
arrangements are consistent with the
hospital length-of-stay requirements.
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62411
The Departments devoted
considerable resources over a sustained
period of time to develop rules that
provide greater specificity for
distinguishing between negotiated
compensation arrangements that would
give attending providers an incentive to
deliver health care services efficiently
and arrangements that could give
providers an incentive to discharge
patients in contravention of the statute
and regulations. The great variety,
complexity, and mutability of such
arrangements 3 would have required
extensive rules that at best were likely
to impose heavy administrative costs
and yet were still of only marginal value
in clarifying what arrangements would
be permissible. For this reason, the rules
on compensation arrangements for
attending providers are adopted
unchanged from the interim final rules.
The final regulations do not attempt
to provide guidance on this issue
through examples. Certainly the bonus
arrangement described in one comment,
based on the percentage of discharges
within 24 hours, violates the prohibition
against providing inducements for early
discharge. Such an example is not
included in the final regulations to
avoid the inference that anything less
blatant would be permissible. Examples
of less blatant arrangements could be
similarly misleading, whether the
conclusion was that the arrangement
was permissible or impermissible, since
there are bound to be differences
between arrangements that would have
been described in the regulations and
any actual arrangement for an attending
provider, and in some cases even minor
differences could change the result.
Authorization and Precertification
The interim final rules and these final
regulations provide, under paragraph
(a), that a group health plan or a health
insurance issuer may not require a
physician or other health care provider
to obtain authorization from the plan or
issuer to prescribe a hospital length of
stay that is subject to the general rule.
3 Broad classes of examples include fee-forservice, capitation, productivity-based salary,
incentive contracting, blended systems, prospective
versus post-service payment, etc. See e.g., Theory
and Practice in the Design of Physician Payment
Incentives, James C. Robinson (University of
California, Berkley), The Milbank Quarterly, Vol.
79, No. 2, 2001; Regulation of Managed Care
Incentive Payments to Physicians, Stephen Latham
(Boston University School of Law), 22 Am. J.L. &
Med. 399; Blended Payment Methods in Physician
Organizations Under Managed Care, James C.
Robinson, JAMA 1999;282:1258–1263; The
Alignment and Blending of Payment Incentives
Within Physician Organizations, JC Robinson, SM
Shortell, R Li, LP Casalino, T Rundall, Health
Services Research Vol 39, Issue 5, pages 1589–1606,
Oct. 2004.
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Under paragraph (b) of the interim
final rules and these final regulations, a
plan or issuer may not restrict benefits
for part of a stay that is subject to the
general rule in a way that is less
favorable than a prior portion of the
stay. An example in the interim final
rules and these final regulations
illustrates that a plan or issuer is
precluded from requiring a covered
individual to obtain precertification for
any portion of a hospital stay that is
subject to the general rule if
precertification is not required for any
preceding portion of the stay. However,
the interim final rules do not prevent a
plan or issuer from requiring
precertification for any portion of a stay
after 48 hours (or 96 hours), or from
requiring precertification for an entire
stay.
Under paragraph (c) of the interim
final rules and these final regulations, a
plan or issuer may not increase an
individual’s coinsurance for any later
portion of a 48-hour (or 96-hour)
hospital stay. An example in the interim
final rules and these final regulations
illustrates that plans and issuers may
vary cost-sharing in certain
circumstances, provided the costsharing rate is consistent throughout the
48-hour (or 96-hour) hospital length of
stay.
One comment asked whether less
favorable cost sharing for the 48-hour
(or 96-hour) stay can be applied to
covered individuals who fail to give
advance notice or notice upon
admission for the services or providers
related to the stay, if such a penalty
applies in other hospitalization
situations. This issue was addressed in
Example 2 of paragraph (c)(3) of the
interim final rules. This example is
repeated in the final regulations and
illustrates that a plan may require
advance notice for services or providers
related to hospital length of stay in
connection with childbirth, in order for
a covered individual to obtain more
favorable cost sharing under the plan or
coverage. Such requirements may not be
used to deny an individual benefits for
any portion of the 48-hour (or 96-hour)
stay based on a determination of
medical necessity or appropriateness.
Any variance in cost-sharing related to
compliance with a plan’s or an issuer’s
advance notice requirements must be
applied consistently throughout the 48hour (or 96-hour) stay. Under the
principles set forth in the rule and
illustrated in this example, a plan or
issuer could generally apply less
favorable cost sharing towards the
hospital length of stay in connection
with childbirth of an individual who
failed to satisfy the plan’s advance
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notice requirements, to the extent
permissible under the preexisting
condition rules in 26 CFR 54.9801–3, 29
CFR 2590.701–3, and 45 CFR 146.111
and 148.120.4
Notice Requirements under ERISA and
the PHS Act
This section of the final regulations
addresses the Newborns’ Act notice
requirements under ERISA and the PHS
Act. The interim final rules, and these
final regulations, contain different
notice provisions for ERISA-covered
group health plans, nonfederal
governmental plans, and health
insurance issuers in the individual
market. ERISA-covered group health
plans are required to comply with the
ERISA notice regulations, whether
insured or self-insured. Nonfederal
governmental plans and health
insurance issuers in the individual
market are required to comply with the
PHS Act notice regulations. Because
there are fundamental differences
between the types of entities regulated
under ERISA as compared to the PHS
Act, and in the structure of the two acts,
the notice requirements in the ERISA
regulations and PHS Act regulations
differ.
Notice Requirements under ERISA.
The interim final rules and these final
regulations require group health plans
that are subject to ERISA to comply with
summary plan description (SPD)
disclosure requirements at 29 CFR
2520.102–3(u). The SPD rules generally
require that participants and
beneficiaries in a group health plan be
furnished an SPD to apprise them of
their rights and obligations. The rules
also prescribe the content of the SPD
and the manner and timing in which
participants and beneficiaries are to be
notified of any material modification to
the terms of the plan or any change in
the information required to be included
in the SPD.
In November 2000, the Department of
Labor finalized the SPD content
regulation (65 FR 70241) requiring that
all group health plans (including
insured plans not subject to the federal
Newborns’ Act) provide language in the
SPD that describes the federal or state
law requirements applicable to the plan
or any health insurance coverage offered
4 In order to avoid imposing an impermissible
preexisting condition exclusion, plans and group
health insurance issuers that require individuals to
notify the plan or issuer of pregnancy within a
certain amount of time (for example, within the first
trimester) must waive or modify the notice
requirement for individuals who enroll in the plan
after the time notice was required. This also applies
to individual market issuers with respect to
federally eligible individuals they are required to
enroll.
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under the plan relating to hospital
lengths of stay in connection with
childbirth for the mother or newborn
child. If federal law applies in some
areas in which the plan operates and
state law applies in other areas, the SPD
should describe the different areas and
the federal or state law requirements
applicable in each. Model language for
plans subject to the federal Newborns’
Act’s requirements is included in the
SPD content regulation. This change
became applicable as of the first day of
the second plan year beginning on or
after January 22, 2001.
Some comments asked for
clarification about whether the notice
can be provided through electronic
media, as an alternative to traditional
paper disclosure. Under ERISA, the
notice can be provided through
electronic media if the plan complies
with ERISA’s electronic disclosure rules
in 29 CFR 2520.104b–1.
Some comments requested that the
rules require plans to provide
information to patients and providers
regarding who has legal oversight with
respect to the Newborns’ Act and who
to contact in the event of a violation.
However, this concern is already
addressed by current regulation. Under
29 CFR 2520.102–3(t)(1) of the SPD
content rules, ERISA plans are required
to provide a statement of ERISA rights
in the SPD. Among other things, this
provision requires ERISA-covered plans
to provide information on the
enforcement of a participant or
beneficiary’s rights and who to contact
if there are any questions about the
plan.
Notice Requirements under the PHS
Act. Nonfederal governmental plans.
The Newborns’ Act requires nonfederal
governmental plans to comply with the
Newborns’ Act notice requirements
under section 711(d) of ERISA as if
section 711(d) applied to such plans.
The interim final rules and these final
regulations require plans that are subject
to the federal Newborns’ Act
requirements to provide a notice with
specific language describing the federal
requirements. Under the interim final
rules and these final regulations, if
federal law applies in some areas in
which the plan operates and state law
applies in others, the plan must provide
the appropriate notice to each
participant and beneficiary who is
covered by federal law.
Several comments on the interim final
rules objected that specific language was
required for the disclosure statement,
and suggested that the regulation
instead should have provided
guidelines for plans to base their own
language on (such as language that
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comports with the Department of
Labor’s sample language). However,
requiring specific language ensures the
substantive adequacy of the notices.
Additionally, because many plans
presumably have already incorporated
that mandatory language into their
documents since the effective date of
the interim final rules, continuing to
require that language is the simplest
approach.
As in the interim final rules, these
final regulations require nonfederal
governmental plans to provide notice
not later than 60 days after the first day
of the plan year following the effective
date, regardless of whether the plan had
already provided notice under the
Department of Labor standards. This
takes into account the fundamental
differences between the nonfederal
governmental plans regulated under the
PHS Act and the types of entities
regulated under ERISA. However, with
respect to the requirement that notice be
provided within that 60-day period, the
final regulations include an exception
for plans with regard to participants and
beneficiaries for whom the plan has
already provided notices in accordance
with the interim final regulations that
are consistent with these final
regulations (such as self-insured
nonfederal governmental plans that are
subject to the federal Newborns’ Act
requirements and that have already
provided such notices).
Health insurance issuers in the
individual market. The Newborns’ Act
requires health insurance issuers in the
individual market to comply with the
Newborns’ Act notice requirements
under section 711(d) of ERISA as if
section 711(d) applied to such issuers.
Thus, the interim final rules and these
final regulations require individual
market health insurance issuers that
provide benefits for hospital lengths of
stay in connection with childbirth to
include, in the insurance contract, a
rider, or equivalent amendment to the
contract, specific language that notifies
policyholders of their rights under the
Newborns’ Act. The interim final rules
and these final regulations also require
such issuers to provide this notice not
later than a specific time frame that is
within a few months after the effective
date of the regulations.
Several comments on the interim final
rules objected that specific language was
required for the disclosure statement
and suggested instead there should be
guidelines for issuers to base their own
language on. However, requiring
specific language ensures the
substantive adequacy of the notices.
Additionally, because issuers
presumably have already incorporated
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that language into their documents since
the effective date of the interim final
rules, continuing to require that same
language is the simplest approach.
These final regulations retain the
notice exception in the interim final
rules for issuers that are subject only to
state insurance law requirements
regarding hospital lengths of stay
following childbirth.
Applicability in States
The statute and the interim final rules
include an exception to the Newborns’
Act requirements for health insurance
coverage in certain states. Specifically,
the Newborns’ Act and the interim final
rules do not apply with respect to health
insurance coverage if there is a state law
that meets any of the criteria 5 that
follow:
• The state law requires health
insurance coverage to provide at least a
48-hour (or 96-hour) hospital length of
stay in connection with childbirth;
• The state law requires health
insurance coverage to provide for
maternity and pediatric care in
accordance with guidelines established
by the American College of
Obstetricians and Gynecologists, the
American Academy of Pediatrics, or any
other established professional medical
association; or
• The state law requires that
decisions regarding the appropriate
hospital length of stay in connection
with childbirth be left to the attending
provider in consultation with the
mother. The interim final rules and
these final regulations clarify that state
laws that require the decision to be
made by the attending provider with the
consent of the mother satisfy this
criterion.
Although this exception applies with
respect to insured group health plans, it
does not apply with respect to a group
health plan to the extent the plan
provides benefits for hospital lengths of
stay in connection with childbirth other
than through health insurance coverage.
Accordingly, self-insured plans in all
states generally are required to comply
with the federal requirements (except
those nonfederal governmental plans
that have opted out of the PHS Act
requirements).
These final regulations repeat the
statute and the interim final rules with
one clarification. With respect to the
second criterion above (professional
5 HHS has the responsibility to enforce the federal
Newborns’ Act with regard to issuers in states that
do not have one of the three types of state laws
described in the Newborns’ Act. As of the
publication of these final regulations, the only state
in which HHS is enforcing the Newborns’ Act with
respect to issuers is Wisconsin.
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62413
guidelines), the statute only addresses
the period following a vaginal delivery
or a caesarean section. Accordingly,
although guidelines issued by
professional medical associations such
as the American College of Obstetricians
and Gynecologists (ACOG) cover a
spectrum of care both before and after
childbirth, the only relevant guidelines
for this purpose are those pertaining to
care following childbirth. Therefore, the
final rules include an express
clarification that State law need only
require coverage in accordance with
professional guidelines that deal with
care following childbirth. Guidelines
relating to other issues are not relevant
for this purpose.
One comment to the interim final
rules supported the criteria used in
those rules for determining whether the
federal Newborns’ Act applies in a given
state. However, another comment
objected to the fact that issuers in states
that have enacted one of the three types
of state laws described in the federal
Newborns’ Act would arguably be
exempt from several of the federal Act’s
requirements, such as the prohibitions
on offering incentives to providers to
induce them to provide care in a
manner inconsistent with the Act. This
comment asked us to reconsider
whether the regulations should provide
such a broad exception from the federal
Act’s requirements in such states. The
statutory language does not require state
law to include all the federal provisions,
such as the anti-incentive provisions, in
order for health insurance coverage in
that state to be excepted from the federal
requirements. In light of this flexibility,
these final regulations retain the
exception from the interim final rules.
Applicability Date
These final rules apply to group
health plans, and health insurance
issuers offering group health insurance
coverage, for plan years beginning on or
after January 1, 2009. The final rules for
the individual market apply with
respect to health insurance coverage
offered, sold, issued, renewed, in effect,
or operated in the individual market on
or after January 1, 2009. Until the
applicability date for this regulation,
plans and issuers are required to
continue to comply with the
corresponding sections of the
regulations previously published in the
Federal Register (63 FR 57546) and
other applicable regulations.
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III. Economic Impact and Paperwork
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Summary—Department of Labor and
Department of Health and Human
Services
The Newborns’ Act provisions
generally prohibit group health plans
and group health insurance issuers from
limiting hospital lengths of stay in
connection with childbirth to less than
48 hours for vaginal deliveries and 96
hours for cesarean sections and from
requiring a health care practitioner to
obtain preauthorization for such stays.
For insured coverage, the Newborns’
Act allows any state law, meeting one of
three criteria, to take its place. The
Departments have crafted these
regulations to secure the Act’s
protections in as economically efficient
a manner as possible, and believe that
the economic benefits of the regulations
justify their costs.6
The primary economic benefits
associated with securing these
minimum lengths of stay derive from
the reduction in complications linked to
premature discharge of mothers and
newborns. Complications that are easily
treated and readily identifiable, like
excessive bleeding and infection in new
mothers and dehydration and
hyperbilirubinemia in their newborns,
are common causes for readmission
following a premature discharge. These
complications and the subsequent
readmissions are expensive and cause
avoidable suffering for mothers and
their newborns.
By eliminating the need to obtain
preauthorization for affected stays, the
Act provides affected individuals with
increased access to the health care
system. Increased access fosters timelier
and fuller medical care, better health
outcomes, and improved quality of life.
This is especially true for certain
individuals affected by the Newborns’
Act provisions. For example, lowerincome individuals, when denied
coverage for the full length of stay, are
more likely to forego care for financial
reasons. When adverse health outcomes
result, costs for the individual and the
plan are high. For these individuals
especially, this requirement is more
likely to mean receiving timely, quality
postnatal care, and living healthier
lives.
Any mandate to increase the richness
of health benefits, however, adds to the
6 The Newborns’ Act still requires that insured
plans disclose a notice outlining participants’ rights
regarding hospital lengths of stay related to
childbirth. Nonetheless, final regulations related to
that notice were published separately (see 65 FR
70266, Nov. 21, 2000) and so those costs are not
included herein.
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cost of health coverage. Plans can
mitigate costs by increasing cost-sharing
or by reducing non-mandated benefits.
This in turn shifts the economic burden
of the regulation to plan participants,
and may induce some employers and
employees, as well as those in the
individual insurance market, to drop
coverage. The cost of enacting federal
minimum stay regulation is estimated to
fall between $139 and $279 million
annually.7 However, as this constitutes
a small fraction of one percent of total
health care expenditures, it would most
likely be a small, possibly negligible,
factor in most employers’ decisions to
offer health coverage and individuals’
decisions to enroll.
While the interim final regulations
clarified several provisions within the
statute, this action serves primarily to
provide the certainty associated with a
final rule for the regulated community,
as well as update the cost of the
regulation, adjusting for changes in the
landscape of the community. Because
these regulations are being published
several years after the Newborns’ Act’s
passage and minimal interpretation of
the statutory language was required, the
regulatory implementation costs should
be negligible. Costs of the final
regulation are detailed below in the
section entitled ‘‘Unified Analysis of
Costs and Benefits.’’ Benefits of the
regulation are also discussed in that
section at length, although because the
benefits primarily involve quality of life
improvements, the Departments have
not attempted to quantify them. They
do, however, believe them to be
sufficiently large so as to justify the cost
of the regulation.
Executive Order 12866—Department of
Labor and Department of Health and
Human Services
Under Executive Order 12866, the
Departments must determine whether a
regulatory action is ‘‘significant’’ and
therefore subject to the requirements of
the Executive Order and subject to
review by the Office of Management and
Budget (OMB). Under section 3(f), the
order defines a ‘‘significant regulatory
action’’ as an action that is likely to
7 The vast majority of this cost is attributable to
the impact of the statute. ($14 million is the upper
bound cost attributable to the exercise of regulatory
discretion.) Moreover, there are no increased costs
attributable to any new exercise of regulatory
discretion in the final rule. Instead, the final rule
repeats the interpretations of the interim final rule.
Any increased costs over the 1998 estimate in the
interim final rules are attributable to economic
factors, such as increased cost of care (from 1996
to 2007 dollars), increased number of births, and
increased number of participants and beneficiaries
covered by self-insured plans to which the
regulations apply.
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result in a rule (1) having an annual
effect on the economy of $100 million
or more, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
state, local or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
Pursuant to the terms of the Executive
Order, it has been determined that this
action is ‘‘economically significant’’ and
is subject to OMB review under Section
3(f) of the Executive Order. Consistent
with the Executive Order, the
Departments have assessed the costs
and benefits of this action. The
Departments’ assessment, and the
analysis underlying the assessment, is
detailed below. The Departments
performed a comprehensive, unified
analysis to estimate the costs and
benefits attributable to the regulations
for purposes of compliance with
Executive Order 12866, the Regulatory
Flexibility Act, and the Paperwork
Reduction Act.
These final regulations are needed to
provide certainty for the affected
community, as well as clarify the
economic burden that the Newborns’
Act will place on health plans and their
participants. The Departments believe
that this regulation’s benefits will justify
its costs. This belief is grounded in the
assessment of costs and benefits that is
summarized earlier and detailed below.
Regulatory Flexibility Act—Department
of Labor and Department of Health and
Human Services
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to
Federal rules that are subject to the
notice and comment requirements of
section 553(b) of the Administrative
Procedure Act (5 U.S.C. 551 et seq.) and
likely to have a significant economic
impact on a substantial number of small
entities. Unless an agency certifies that
a final rule will not have a significant
economic impact on a substantial
number of small entities, section 604 of
the RFA requires that the agency present
a final regulatory flexibility analysis
(FRFA) at the time of the publication of
the notice of final rulemaking describing
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the impact of the rule on small entities.
Small entities include small businesses,
organizations, and governmental
jurisdictions.
Because the 1998 rules were issued as
interim final rules and not as a notice
of proposed rulemaking, the RFA did
not apply and the Departments were not
required to either certify that the rule
would not have a significant impact on
a substantial number of small entities or
conduct a regulatory flexibility analysis.
The Departments nonetheless crafted
those regulations in careful
consideration of effects on small
entities, and conducted an analysis of
the likely impact of the rules on small
entities. This analysis was detailed in
the preamble to the interim final rule.
For purposes of this discussion, the
Departments consider a small entity to
be an employee benefit plan with fewer
than 100 participants. Pursuant to the
authority of section 104(a)(3) of ERISA,
the Department of Labor has previously
issued at 29 CFR 2520.104–20,
2520.104–21, 2520.104–41, 2520.104–46
and 2520.104b–10, certain simplified
reporting provisions and limited
exemptions from reporting and
disclosure requirements for small plans,
including unfunded or insured welfare
plans covering fewer than 100
participants and which satisfy certain
other requirements.
Further, while some small plans are
maintained by large employers, most are
maintained by small employers. Both
small and large plans may enlist small
third party service providers to perform
administrative functions, but it is
generally understood that third party
service providers shift their costs to
their plan clients in the form of fees.
Thus, the Departments believe that
assessing the impact of this final rule on
small plans is an appropriate substitute
for evaluating the effect on small
entities. The definition of small entity
considered appropriate for this purpose
differs, however, from a definition of
small business based on size standards
promulgated by the Small Business
Administration (SBA) (13 CFR 121.201)
pursuant to the Small Business Act (5
U.S.C. 631 et seq.). The Department of
Labor solicited comments on the use of
this standard for evaluating the impact
of the proposed regulations on small
entities. No comments were received
with respect to this standard.
The Departments believe that the final
regulation will not have a significant
economic impact on a substantial
number of small entities. The direct
costs of restricting short stay policies is
estimated to fall between $15 million
and $31 million for small plans which
amount to a per-participant cost of
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between nine and nineteen dollars for
those plans affected, or a small fraction
of one percent of total small plan
expenditures.8
The Departments estimate that prior
to the Act, 115,000 small plans with 1.6
million participants would have
restricted lengths of stay in connection
with childbirth or required
preauthorization for such stays.9 While
this represents just 5 percent of all small
plans, the Departments believe it may
represent a substantial number of small
entities.
Paperwork Reduction Act—Department
of Labor and Department of Health and
Human Services
1. Department of Labor
These rules contain no new
information collection requirements that
are subject to review and approval by
OMB under the Paperwork Reduction
Act of 1995 (Pub. L. 104–13, 44 U.S.C.
Chapter 35). The Department of Labor
reported the information collection
burdens associated with the Newborns’
Act in the interim rules (Interim Rules
Amending ERISA Disclosure
Requirements for Group Health Plans)
implementing section 711(d) of ERISA
that were published in the Federal
Register on April 8, 1997 (62 FR 16979).
OMB approved the information
collection under OMB Control Number
1210–0039, expiring on March 31, 2010.
2. Department of Health and Human
Services
These rules contain no new
information collection requirements that
are subject to review and approval by
OMB under the Paperwork Reduction
Act of 1995 (Pub. L. 104–13, 44 U.S.C.
Chapter 35). HHS reported the
8 Departments’ estimates using the 2005 Medical
Expenditures Panel Survey Household Component
(MEPS–HC), the 2006 Medical Expenditures Panel
Survey Insurance Component (MEPS–IC) and the
National Centers for Disease Control and Prevention
(CDC) National Hospital Discharge Survey: 2005
Annual Summary with Detailed Diagnosis and
Procedure Data determined that of participants
affected by the regulation, 11 percent were enrolled
in small plans. Costs born by small plans were 11
percent of all costs.
9 Estimates are based on the 2006 MEPS–IC. It
should be noted, however, that the Pregnancy
Discrimination Act of 1978 allows firms with less
than 15 employees that offer health insurance to
exclude maternity care. The 2000 Mercer/Foster
Higgins National Survey of Employer Sponsored
Health Plans found that 7 percent of firms with 10–
24 employees did not offer such benefits, but the
survey did not examine smaller firms. Rough
estimates by the Departments suggest that the share
of firms with 9 or fewer employees that offer health
benefits but exclude maternity benefits is 21
percent. As the cost of these benefits rises, this
share is likely to increase which, while having a
small effect on the number of participants affected
by the regulation, might significantly decrease the
number of small plans affected by the regulation.
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information collection burdens
associated with the Newborns’ Act in
the interim rules (Information
Collection Requirements Referenced in
HIPAA for the Group Market,
Supporting Regulations 45 CFR 146),
published in the Federal Register on
April 8, 1997. These collection
requirements were approved under
OMB Control Number 0938–0702,
expiring on August 31, 2009.
Special Analyses—Department of the
Treasury
Notwithstanding the determinations
of the Departments of Labor and of
Health and Human Services, for
purposes of the Department of the
Treasury it has been determined that
this Treasury decision is not a
significant regulatory action. Therefore,
a regulatory assessment is not required.
It has also been determined that section
553(b) of the Administrative Procedure
Act (5 U.S.C. chapter 5) does not apply
to these Treasury regulations, and,
because these regulations do not impose
a collection of information on small
entities, a Regulatory Flexibility
Analysis under the Regulatory
Flexibility Act (5 U.S.C. chapter 6) is
not required. Pursuant to section 7805(f)
of the Code, the notice of proposed
rulemaking preceding these regulations
was submitted to the Small Business
Administration for comment on its
impact on small business.
Congressional Review Act
These regulations are subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.) and have been
transmitted to Congress and the
Comptroller General for review. These
regulations, however, are considered a
‘‘major rule,’’ as that term is defined in
5 U.S.C. 804, because they are likely to
result in an annual effect on the
economy of $100 million or more.
Unfunded Mandates Reform Act
For purposes of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4), as well as Executive Order
12875, these regulations do not include
any federal mandate that may result in
expenditures by state, local, or tribal
governments,10 however, they include
mandates which may impose an annual
burden of $100 million or more on the
private sector, updated annually for
inflation. After applying the most
10 Nonfederal governmental plans can opt-out of
these requirements and it was assumed that those
States that had rules in place that supplanted the
Newborns’ Act (that is, all States except one)
would.
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current gross domestic product implicit
price deflator in 2008, that threshold is
approximately $130 million.
Federalism Statement Under Executive
Order 13132—Department of Labor and
Department of Health and Human
Services
Executive Order 13132 outlines
fundamental principles of federalism. It
requires adherence to specific criteria by
federal agencies in formulating and
implementing policies that have
‘‘substantial direct effects’’ on the
States, the relationship between the
national government and States, or on
the distribution of power and
responsibilities among the various
levels of government. Federal agencies
promulgating regulations that have
these federalism implications must
consult with State and local officials,
and describe the extent of their
consultation and the nature of the
concerns of State and local officials in
the preamble to the regulation.
In the Departments’ view, these final
regulations have federalism
implications because they may have
substantial direct effects on the States,
the relationship between the national
government and States, or on the
distribution of power and
responsibilities among the various
levels of government. However, in the
Departments’ view, the federalism
implications of these final regulations
are substantially mitigated because,
with respect to health insurance issuers,
all but one of the States have
requirements that prescribe benefits for
hospital lengths of stay in connection
with childbirth that satisfy the
Newborns’ Act hospital length of stay
requirements.
In general, through section 514,
ERISA supersedes State laws to the
extent that they relate to any covered
employee benefit plan, but preserves
State laws that regulate insurance. At
the same time, however, ERISA
prohibits States from regulating a plan
as an insurance company. HIPAA added
a new section to ERISA (as well as to the
PHS Act and the Code) narrowly
preempting State requirements for
issuers of group health insurance
coverage.11 HIPAA’s conference report
states that the conferees intended only
the narrowest preemption of State laws
with regard to health insurance issuers.
H.R. Conf. Rep. No. 736, 104th Cong. 2d
Session 205 (1996).
The Newborns’ Act also added a new
section to ERISA (and to the PHS Act
and the Code) which provides that the
11 The Newborns’ Act was incorporated into the
administrative framework established by HIPAA.
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federal requirements applicable to group
health plans and health insurance
issuers concerning hospital lengths of
stay for mothers and newborns
following childbirth do not apply if
State law meets one or more of three
specific criteria in the statute.12 The
accompanying conference report states
that it is the intent of the conferees that
States may impose more favorable
requirements for the treatment of
maternity coverage under health
insurance coverage than required by the
Newborns’ Act. H.R. Conf. Rep. No.
104–812, 104th Cong. 2d Session 88
(1996).
Guidance conveying the Newborns’
Act hospital length of stay requirements
was published in the Federal Register
on October 27, 1998 (63 FR 57546).
These final regulations clarify and
implement the statute’s minimum
standards and do not significantly
reduce the discretion given the States by
the statute. Moreover, the Departments
understand that all but one State have
requirements that prescribe benefits for
hospital lengths of stay in connection
with childbirth that satisfy the
Newborns’ Act requirements.
The Newborns’ Act modified HIPAA’s
framework to provide that the States
have primary responsibility for
enforcement of the provisions of the
Newborns’ Act as they pertain to
issuers, but that the Secretary of Health
and Human Services must enforce any
provision that a State fails to
substantially enforce. To date, CMS
enforces the Newborns’ Act hospital
length of stay requirements in only one
State. When exercising its responsibility
to enforce the Newborns’ Act
provisions, CMS works cooperatively
with the State for the purpose of
addressing the State’s concerns and
avoiding conflicts with the exercise of
State authority. CMS has developed
procedures to implement its
enforcement responsibilities, and to
afford the States the maximum
opportunity to enforce the Newborns’
Act requirements in the first instance.
CMS procedures address the handling of
12 The federal requirements concerning hospital
lengths of stay in connection with childbirth do not
apply with respect to health insurance coverage if
state law requires (1) such coverage to provide for
at least a 48-hour hospital length of stay following
a vaginal delivery and at least a 96-hour length of
stay following a delivery by cesarean section, (2)
such coverage to provide for maternity and
pediatric care in accordance with guidelines
established by the American College of
Obstetricians and Gynecologists, the American
Academy of Pediatrics, or other established
professional medical associations, or (3) in
connection with such coverage for maternity care,
that the hospital length of stay for such care is left
to the decision of (or is required to be made by) the
attending provider in consultation with the mother.
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reports that States may not be enforcing
the Newborns’ Act requirements, and
the mechanism for allocating
responsibility between the States and
CMS. In compliance with Executive
Order 13132’s requirement that agencies
examine closely any policies that may
have federalism implications or limit
the policymaking discretion of the
States, the Department of Labor and
CMS have consulted and worked
cooperatively with affected State and
local officials.
For example, the Departments sought
and received input from State insurance
regulators and the National Association
of Insurance Commissioners (NAIC).
The NAIC is a non-profit corporation
established by the insurance
commissioners of the 50 States, the
District of Columbia, and the four U.S.
territories. In most States the insurance
commissioner is appointed by the
governor; in approximately 14 States,
the insurance commissioner is an
elected official. Among other activities,
it provides a forum for the development
of uniform policy when uniformity is
appropriate. Its members meet, discuss
and offer solutions to mutual problems.
The NAIC sponsors quarterly meetings
to provide a forum for the exchange of
ideas and in-depth consideration of
insurance issues by regulators, industry
representatives and consumers. CMS
and Department of Labor staff have
consistently attended these quarterly
meetings to listen to the views of the
State insurance departments.
In addition, the Departments
informally consulted with the NAIC in
developing the interim final regulations.
Through the NAIC, the Departments
sought and received the input of State
insurance departments regarding
preemption of State laws, applicability
of the Newborns’ Act provisions, and
certain insurance industry definitions
(e.g., attending provider). In general,
these final regulations do not change the
interim final rules. Significantly, the
Departments received only eleven
formal comment letters on the interim
final regulation, none of which were
from or on behalf of the NAIC or any of
the States.
The Departments have also
cooperated with the States in several
ongoing outreach initiatives, through
which information is shared among
federal regulators, State regulators and
the regulated community. In particular,
the Department of Labor has established
a Health Benefits Education Campaign
with more than 70 partners, including
CMS, NAIC and many business and
consumer groups. CMS has sponsored
conferences with the States—the
Consumer Outreach and Advocacy
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conferences in March 1999 and June
2000, and the Implementation and
Enforcement of HIPAA National StateFederal Conferences in August 1999,
2000, 2001, 2002, and 2003.
Furthermore, both the Department of
Labor and CMS Web sites offer links to
important State Web sites and other
resources, facilitating coordination
between the State and federal regulators
and the regulated community.
Throughout the process of developing
these regulations, to the extent feasible
within the specific preemption
provisions of HIPAA and the Newborns’
Act, the Departments have attempted to
balance the States’ interests in
regulating health insurance issuers, and
Congress’ intent to provide uniform
minimum protections to consumers in
every State. By doing so, it is the
Departments’ view that they have
complied with the requirements of
Executive Order 13132.
Pursuant to the requirements set forth
in Section 8(a) of Executive Order
13132, and by the signatures affixed to
these final regulations, the Departments
certify that the Employee Benefits
Security Administration and the Centers
for Medicare & Medicaid Services have
complied with the requirements of
Executive Order 13132 for the attached
Final Regulations for Group Health
Plans and Health Insurance Issuers
Under the Newborns’ and Mothers’
Health Protection Act (RIN 1210–AA63
and RIN 0938–AI17), in a meaningful
and timely manner.
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Unified Analysis of Costs and Benefits
1. Introduction
The Newborns’ Act’s provisions
generally prohibit group health plans
and health insurance issuers from: (1)
Limiting hospital lengths of stay in
connection with childbirth to less than
48 hours for vaginal deliveries and 96
hours for cesarean sections, and (2)
requiring preauthorization for the 48/96
hour stays. The primary effect and
intent of the provision is to reduce
postpartum complications associated
with premature discharge.
These regulations draw on the
Departments’ authority to clarify and
interpret the Newborns’ Act’s statutory
provisions in order to secure the
protections intended by Congress for
newborns and mothers. The
Departments crafted them to satisfy this
mandate in as economically efficient a
manner as possible, and believe that the
economic benefits of the regulations
justify their costs. This conclusion takes
into account both the effect of the
statute and the impact of the discretion
exercised in the regulations.
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This regulation is needed to clarify
and interpret the Newborns’ Act
provisions under section 711 of ERISA,
sections 2704 and 2751 of the PHS Act,
and section 9811 of the Internal
Revenue Code and to ensure that group
health plans and health insurance
issuers subject to these rules do not
impermissibly restrict benefits or
require preauthorization for 48-hour or
96-hour hospital lengths of stay in
connection with childbirth.
2. Costs and Benefits of the Statute
The Departments provide qualitative
assessments of the nature of the costs
and benefits that are expected to derive
from the statutory provisions of the
Newborns’ Act. In addition, the
Departments provide summaries of any
credible, empirical estimates of these
effects that are available.
In order to determine how many plan
participants could benefit from the
Newborns’ Act provision, the
Departments considered the estimated
2.8 million births in 2005 by women
with private health insurance.13 Of
these, approximately 55.0 percent are
assumed to be normal, healthy
deliveries, and therefore eligible for
early discharge.14 Because legislation
has been passed in every state but
Wisconsin, the Departments limited
their analysis to participants in selfinsured group health plans throughout
the country and all health plans within
Wisconsin. Finally, because Health
Maintenance Organizations (HMOs)
have traditionally had more aggressive
short-stay policies, the share of workers
enrolled in HMOs versus commercial
plans was taken into account as were
the share of those plans with short-stay
policies.15
Based on these assumptions,
approximately 328,000 births or roughly
13 Departments’ estimate based on the 2005
MEPS–HC and the 2005 CDC Survey.
14 The CDC reported that of the 4.0 million births
in 2005, 2.2 million, or 55.0 percent of those
newborns were categorized as without any illness
or risk-related diagnosis (e.g. jaundice, respiratory
distress, disorders relating to short gestation and
low birth weight). No data are available on whether
health of newborns varies by mothers’ insurance
status, although insured mothers are more likely to
receive prenatal care and this would be expected to
positively affect the share of ‘‘healthy’’ births (see
Susan Egerter et al., ‘‘Timing of Insurance Coverage
and Use of Prenatal Care Among Low-Income
Women,’’ American Journal of Public Health, v.
92(3): 423–427).
15 Julie A. Gazmararian & Jeffrey Koplan found in,
‘‘Length-of-Stay After Delivery: Managed Care
versus Fee for Service,’’ Health Affairs, v. 15(4): 74–
80, that 35.9 percent of enrollees in commercial
plans were discharged within one day after delivery
compared to 57.7 percent from commercial HMOs.
The shares of individuals enrolled in HMOs at selfinsured and fully-insured plans were taken from the
2007 Kaiser Family Foundation’s Survey of
Employer Sponsored Insurance.
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22 percent of healthy births by privately
insured women would be affected by
the provision.16 If each woman then
stayed the maximum period outlined in
the statute, approximately 348,000
additional days of hospital care would
be required.17 Assuming hospitals
charge $800 per day for postpartum
care, the annual cost of the provision
would be $279 million: $1.7 million of
which would be attributable to the
individual market in Wisconsin; the
remaining $276.9 million would be
attributable to the group market in
Wisconsin and self-funded plans
throughout the country. However,
because the statute does not require a
48- or 96-hour stay, but instead gives the
decision-making authority to the
attending physician in consultation
with the mother, it is expected that not
all of these births will result in
additional hospital time. If only one-half
of affected mothers had their stays
extended by the full amount, the annual
cost of the provision would be $139
million, less than $1 million of which
would be attributable to the individual
market of Wisconsin.18
16 The number of women age 10–54 with private
insurance was estimated using the 2005 MEPS–HC.
Fertility rates for different age brackets were taken
from the 2005 CDC National Hospital Discharge
Survey and were interacted with the number of
privately insured women to ascertain the number of
births by insured women. This was then interacted
with the share of infants that were born healthy, as
reported in the 2005 CDC report, to determine the
number of healthy births to privately-insured
women.
To restrict the number of privately insured
women having healthy births to those with ESI, the
share of all privately insured women, age 10–54,
that had ESI was taken from the 2007 March CPS
and interacted with the above number. To then
discern the number of births that would be covered
by the regulation, the 2006 MEPS–IC was used to
ascertain the share of employees in ESI that were
in self-insured plans that had maternal coverage.
This number was further interacted by the share of
employees in the share of those employees in HMO
versus non-HMO health plans as provided by the
2007 Kaiser Family Foundation’s Employer Health
Benefits Survey.
Interacting all of these numbers results in the
328,000 number cited in the text.
17 Based on 1995 discharge rates, approximately
94 percent of the 328,000 births required one
additional day to meet the maximum period
outlined by the statute; 6 percent required two
additional days.
18 The Congressional Budget Office (CBO)
analyzed Senate proposal S. 969, which was an
earlier version of the Newborns’ Act. CBO estimated
900,000 insured births had stays shorter than the
minimum specified in the bill, which would result
in 400,000 additional inpatient days and an
additional 200,000 additional out-patient visits at
an annual cost of $360 million in 2007 dollars (or
$800 for each additional day of inpatient care; $200
for outpatient care). The Departments’ estimate is
significantly less, primarily due to: (1) A large
number of states either clarifying existing policies
for short-stay deliveries or enacting new ones which
supersede the federal statute for all but self-insured
plans; and (2) the CBO estimates included costs for
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While the Departments estimate that
the cost of the NMHPA is as much as
$279 million annually, health plans are
estimated to have spent more than $775
billion in 2007 to cover approximately
201.7 million privately insured
individuals.19 Therefore, the upper
estimate of the costs under the
Newborns’ Act’s provisions represent a
very small fraction of one percent of
total health plan expenditures.
Moreover, the cost of this provision is
likely to decline in the future, despite
increases in overall health care
spending. Since the statute was passed,
there has been a significant increase in
the number of cesarean births,
compared to vaginal births. While
traditionally cesarean births are
associated with higher risk, an
increasing number of women are now
electing to have the procedure.20
Women who elect to have a cesarean
would presumably have a lower risk
than those for whom the procedure is
required and therefore may not require
the prescribed 96-hour recovery period
detailed in the statute.21 If this trend
continues, the burden of this statute
should lessen.
The primary statutory economic
benefits associated with the Newborns’
Act’s provisions derive from an increase
in access to health plan coverage for
postpartum care and monitoring of
mothers and their newborns.
Individuals without coverage for this
care and monitoring are less likely to
remain in the hospital for fear of
incurring expenses that must be paid for
‘out-of-pocket.’ Lower-income
individuals are more likely to forego
follow-up visits, a requirement that was dropped
from the federal statute.
19 The Departments’ estimate is based on the
Office of the Actuary at the Centers for Medicare &
Medicaid Services (CMS) projected measure of total
personal health expenditures by private health
insurance in 2007.
20 The share of all births that are cesarean rose
from 20.7 percent in 1996 to an estimated 31.3
percent in 2005 (CDC (2005). ‘‘National Hospital
Discharge Survey’’ Vital and Health Statistics,
Series 13 (162)). A study by Health Grades Inc.
found a 36.6 percent increase in the number of
‘‘patient choice’’ cesarean sections between 2001
and 2003.
21 Most research comparing complication rates of
cesarean to vaginal births focus on those women
who previously had a cesarean section, as
insufficient data are available to compare initial
vaginal versus initial elected cesarean deliveries. As
such, it is difficult to discern how the medically
advisable stay of an elected cesarean section
compares to that of an uncomplicated vaginal birth.
However, there is much agreement that emergency
cesarean sections, which typically follow a lengthy
labor, are far more dangerous to mother and child
than the elected variety. Given the Newborns’ Act’s
prescribed 96-hour stays for cesarean births when
elected cesareans comprised a smaller share of all
cesareans, it would be reasonable to expect that the
stays for elected cesareans may fall over time.
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care not covered by their insurance.
Foregoing this care and monitoring
increases the risk of adverse health
outcomes, which in turn generates
higher medical costs. Much of these
costs may be shifted to public funding
sources (and therefore to taxpayers) or
to other payers.22
Foregoing appropriate care can also
negatively affect the quality of life.
Improved access to health coverage for
mothers and newborns will lead to more
appropriate medical care and
monitoring, better health outcomes, and
improved quality of life.23 Denied
coverage, individuals must choose
whether to pay for the extra day(s) in
the hospital and potentially suffer
economic hardship or forego the care
and monitoring, creating a risk of an
adverse health outcome. Gaining
coverage will sometimes mean receiving
high quality care and living healthier
lives.24
22 For
more information on health choices of
lower-income individuals, see: Trude, Sally (2003).
‘‘Patient Cost Sharing: How Much is Too Much,’’
Health System Change Issue Brief, no. 72
(December).
23 For more detailed information, see: O’Brien,
Ellen (2003). ‘‘Employer Benefits from Workers’
Health Insurance,’’ Milbank Quarterly, Vol. 1 No. 1.
O’Brien provides an extensive analysis of the
literature on benefits accruing to employers from
offering health benefits and the costs to employers
of unhealthy employees, as well as information on
studies demonstrating that poor health may be
related to lower productivity. In particular, she
discusses studies that have examined the effects on
workplace productivity of specific health
conditions and shows that poor health reduces
workers’ productivity at work, and that effective
health care treatments can reduce productivity
losses and may even pay for themselves in terms
of increased productivity.
24 Research on the benefits of longer stays has
been somewhat mixed. Some studies show shortstays to be correlated with decreased follow-up care
and increased re-hospitalization, particularly for
low-income families, which will ultimately increase
societal costs (for further discussion, see: Galbraith,
Alison A. et al. (2003) ‘‘Newborn Early Discharge
Revisited: Are California Newborns Receiving
Recommended Postnatal Services?’’ Pediatrics, vol.
111 (2): p. 364–371; Lock, Michael & Joel G. Ray.
(1999) ‘‘Higher Neonatal Morbidity after Routine
Hospital Discharge: Are We Sending Newborns
Home Too Early?’’ Canadian Medical Association
Journal, vol. 161 (3): p. 249–253; Malkin, Jesse D.
et al. (2003) ‘‘Postpartum Length of Stay and
Newborn Health: A Cost-Effectiveness Analysis,’’
Pediatrics, vol. 111 (4): p. 316–322).
Since the statutes have been in place, other
studies have argued that higher re-hospitalization
rates found in short-stay newborns are due to more
frequent post-stay evaluations in the four days
following birth, considered the critical window for
ascertaining newborn health, as mandated in health
plans. Once new regulations were passed extending
stays, health plans reduced their follow-up care
policies and newborns were less likely to be
examined in the days following discharge. This
could result in an increase in costs. (For further
discussion, see: Hyman, David A. (2001) ‘‘What
Lessons Should We Learn from Drive-Through
Deliveries?’’ Pediatrics, vol. 107 (2): 406–408;
Madden, Jeanne M. et al. (2002) ‘‘Effects of a Law
Against Early Postpartum Discharges on Newborn
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The provisions of the Newborns’ Act
and its regulation generally apply to
both group health plans and health
insurance issuers. While the costs of the
Newborns’ Act are substantial,
economic theory predicts that issuers
will pass their costs of compliance back
to plans, and that plans may shift some
or all of issuers’ and their own costs of
compliance to participants either
through increases in premiums,
increased cost-sharing, or reducing the
richness of non-mandated health
benefits.25
While 74 million individuals are
enrolled in group or private health
plans, only 15 million individuals are
enrolled in plans that had policies
affected by the Newborns’ Act. Of these,
only 328,000 individuals are expected
to be annually directly impacted and
receive additional coverage they were
previously denied or restricted for 48 or
Follow-up, Adverse Events, and HMO
Expenditures,’’ New England Journal of Medicine,
vol. 347 (25): p. 2031–2038; Madden, Jeanne M. et
al. (2004) ‘‘Length-of-Stay Policies and
Ascertainment of Postdischarge Problems in
Newborns,’’ Pediatrics, vol. 113 (1): p. 42–49.)
The Departments believe, however, that because
most of the complications of newborns manifest
themselves within the immediate 48 hours
following birth, special protection much be given to
that period. Moreover, since the decision to
discharge the patients will be made by the doctor,
in consultation with the mother, many of the
concerns posed by those who oppose extended
stays will be factored into that decision. As such,
the Departments believe that the Newborns’ Act
will improve the health and welfare of mothers and
newborns.
25 The voluntary nature of the employment-based
health benefit system in conjunction with the open
and dynamic character of labor markets make
explicit as well as implicit negotiations on
compensation a key determinant of the prevalence
of employee benefits coverage. It is likely that 80%
to 100% of the cost of employee benefits is borne
by workers through reduced wages (See for
example: Jonathan Gruber and Alan B. Krueger,
‘‘The Incidence of Mandated Employer-Provided
Insurance: Lessons from Workers Compensation
Insurance,’’ Tax Policy and Economy (1991);
Jonathan Gruber, ‘‘The Incidence of Mandated
Maternity Benefits,’’ American Economic Review,
Vol. 84 (June 1994), pp. 622–641; Lawrence H.
Summers, ‘‘Some Simple Economics of Mandated
Benefits,’’ American Economic Review, Vol. 79, No.
2 (May 1989); Louise Sheiner, ‘‘Health Care Costs,
Wages, and Aging,’’ Federal Reserve Board of
Governors working paper, April 1999; and Edward
Montgomery, Kathryn Shaw, and Mary Ellen
Benedict, ‘‘Pensions and Wages: An Hedonic Price
Theory Approach,’’ International Economic Review,
Vol. 33, No. 1, Feb. 1992). The prevalence of
benefits is therefore largely dependent on the
efficacy of this exchange. If workers perceive that
there is the potential for inappropriate denial of
benefits they will discount their value to adjust for
this risk. This discount drives a wedge in the
compensation negotiation, limiting its efficiency.
With workers unwilling to bear the full cost of the
benefit, fewer benefits will be provided. The extent
to which workers perceive a federal regulation
supported by enforcement authority to improve the
security and quality of benefits, the differential
between the employers’ costs and workers’
willingness to accept wage offsets is minimized.
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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
96-hour hospital stays following
childbirth. Though these benefits are
received by a small number of plan
enrollees, the costs are distributed
broadly among all plan participants. As
a result, the cost of the Newborns’ Act
per individual enrollee is expected to be
minimal—between 9 and 19 dollars per
person for those enrolled in affected
plans.26 While it is possible that some
enrollees on the margin will decline
coverage in response to cost increases,
the number of those acting in such a
manner is expected to be negligible. As
such, the benefits of this statute are
believed to justify its costs.
3. Costs and Benefits of the Rules
Applicable to the Newborns’ Act
The interim final rule clarified when
a stay begins under the Newborns’ Act.
Prior to this, private health plans could
use the expectant mother’s admittance
time to determine the required stay, an
assumption that consistently reduced
the number of women experiencing
stays less than those prescribed by the
statute by 5 percent.27 By clarifying this
assumption in the interim final rule, the
number of stays that would have been
shorter than 48/96 hours increased by
approximately 16,000 for all plans, and
by approximately 2,000 for small plans.
This in turn raised the direct costs to
health plans by 5 percent (from $265 to
$279 million for the upper bound for all
plans and from $29 to $31 million for
small plans). However, because it can
take several hours for certain conditions
to present themselves, such as jaundice
and dehydration, the additional hours of
hospital supervision—gained by
generally not using an expectant
mother’s admittance time as the start of
a stay—can be critical. Therefore, the
benefits of this clarification should
justify this additional cost.
The regulation also defines that for
births occurring outside of a hospital,
stays begin once the mother or newborn
is admitted as a hospital inpatient in
connection with childbirth, as defined
by the attending provider. The
Departments lack any firm basis for
quantifying the number of individuals
likely to be affected by this provision,
and therefore are unable to quantify the
increase in costs and benefits. However,
given the special and narrow
circumstances to which this provision
applies, costs and benefits are expected
to be small.
Statutory Authority
The Department of the Treasury final
rule is adopted pursuant to the authority
contained in sections 7805 and 9833 of
the Code (26 U.S.C. 7805, 9833).
62419
The Department of Labor final rule is
adopted pursuant to the authority
contained in 29 U.S.C. 1027, 1059, 1135,
1161–1168, 1169, 1181–1183, 1181 note,
1185, 1185a, 1185b, 1191, 1191a, 1191b,
and 1191c, sec. 101(g), Public Law 104–
191, 110 Stat. 1936; sec. 401(b), Public
Law 105–200, 112 Stat. 645 (42 U.S.C.
651 note); Secretary of Labor’s Order 1–
2003, 68 FR 5374 (Feb. 3, 2003).
The Department of Heath and Human
Services final rule is adopted pursuant
to the authority contained in sections
2701 through 2763, 2791, and 2792 of
the PHS Act (42 U.S.C. 300gg through
300gg–63, 300gg–91, and 300gg–92), as
amended by Public Law 104–191, 110
Stat. 1936, Public Law 104–204, 110
Stat. 2935 and Public Law 105–277, 112
Stat. 2681–436.
Accounting Statement
In accordance with OMB Circular
A–4 (available at https://
www.whitehouse.gov/omb/circulars/
a004/a-4.pdf), in the table below, we
have prepared an accounting statement
showing the classification of the
expenditures associated with the
provisions of this final rule. This table
provides our best estimate for the
annual costs associated with enacting
the federal minimum stay final
regulation.
ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, CY2008
[In millions]
Cost estimates
Category
Low
Annualized Monetized Costs ...........................................................................................................................................
requirements, State regulation of health
insurance.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health
insurance, Pensions, Reporting and
recordkeeping requirements.
45 CFR Part 148
Administrative practice and
procedure, Health care, Health
insurance, Penalties, Reporting and
recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure,
Employee benefit plans, Group health
plans, Health care, Health insurance,
Medical child support, Reporting and
recordkeeping requirements.
Adoption of Amendments to the
Regulations
High
$139.30
$278.50
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation
for part 54 is amended by adding an
entry for § 54.9811–1 in numerical order
and by removing the entry for
§ 54.9811–1T to read in part as follows:
■
Authority: 26 U.S.C. 7805 * * *
Section 54.9811–1 also issued under 26
U.S.C. 9833. * * *
Internal Revenue Service
§ 54.9801–1
26 CFR Chapter I
[Amended]
mstockstill on PROD1PC66 with RULES2
45 CFR Part 146
Health care, Health insurance,
Reporting and recordkeeping
■
Accordingly, 26 CFR Part 54 is
amended as follows:
Par. 2. Section 54.9801–1(a) is
amended by removing the language
‘‘54.9811–1T’’ and adding ‘‘54.9811–1’’
in its place.
26 The total cost of the regulation was calculated
by estimating the number of additional days in the
hospital that short-stay deliveries would require
under the statute. This number was then multiplied
by $800, to reflect the per day hospitalization cost
of a mother (this was a CBO number indexed to
2007 dollars). Having calculated the total cost of the
regulation at $279 million (and a lower bound of
$139 million), these numbers were then divided by
the number of participants in affected health plans
(a total of 15 million) to get an upper ($19) and
lower bound ($9) of the per-participant cost of the
regulation.
27 Departments’ estimate based on the CDC’s 2005
Survey, Tables 37 and 42. The Departments looked
at the share of stays that would be labeled ‘‘short’’
for both mothers and newborns in 1995 (before any
part of the statute was enforced) and found that the
share of newborns with a ‘‘short stay’’ was 5 percent
higher. It was therefore assumed that starting the
clock at the birth of a child would increase the
number of ‘‘short stays’’ by 5 percent.
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62420
§ 54.9801–2
Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
[Amended]
Par. 3. In § 54.9801–2, the
introductory paragraph before the
definitions is amended by removing the
language ‘‘54.9811–1T’’ and adding
‘‘54.9811–1’’ in its place.
■ Par. 4. Section 54.9811–1 is added to
read as follows:
■
§ 54.9811–1 Standards relating to benefits
for mothers and newborns.
mstockstill on PROD1PC66 with RULES2
(a) Hospital length of stay—(1)
General rule. Except as provided in
paragraph (a)(5) of this section, a group
health plan that provides benefits for a
hospital length of stay in connection
with childbirth for a mother or her
newborn may not restrict benefits for
the stay to less than—
(i) 48 hours following a vaginal
delivery; or
(ii) 96 hours following a delivery by
cesarean section.
(2) When stay begins—(i) Delivery in
a hospital. If delivery occurs in a
hospital, the hospital length of stay for
the mother or newborn child begins at
the time of delivery (or in the case of
multiple births, at the time of the last
delivery).
(ii) Delivery outside a hospital. If
delivery occurs outside a hospital, the
hospital length of stay begins at the time
the mother or newborn is admitted as a
hospital inpatient in connection with
childbirth. The determination of
whether an admission is in connection
with childbirth is a medical decision to
be made by the attending provider.
(3) Examples. The rules of paragraphs
(a)(1) and (2) of this section are
illustrated by the following examples. In
each example, the group health plan
provides benefits for hospital lengths of
stay in connection with childbirth and
is subject to the requirements of this
section, as follows:
Example 1. (i) Facts. A pregnant woman
covered under a group health plan goes into
labor and is admitted to the hospital at 10
p.m. on June 11. She gives birth by vaginal
delivery at 6 a.m. on June 12.
(ii) Conclusion. In this Example 1, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 6 a.m. on June 14.
Example 2. (i) Facts. A woman covered
under a group health plan gives birth at home
by vaginal delivery. After the delivery, the
woman begins bleeding excessively in
connection with the childbirth and is
admitted to the hospital for treatment of the
excessive bleeding at 7 p.m. on October 1.
(ii) Conclusion. In this Example 2, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 7 p.m. on October 3.
Example 3. (i) Facts. A woman covered
under a group health plan gives birth by
vaginal delivery at home. The child later
develops pneumonia and is admitted to the
hospital. The attending provider determines
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that the admission is not in connection with
childbirth.
(ii) Conclusion. In this Example 3, the
hospital length-of-stay requirements of this
section do not apply to the child’s admission
to the hospital because the admission is not
in connection with childbirth.
(4) Authorization not required—(i) In
general. A plan may not require that a
physician or other health care provider
obtain authorization from the plan, or
from a health insurance issuer offering
health insurance coverage under the
plan, for prescribing the hospital length
of stay specified in paragraph (a)(1) of
this section. (See also paragraphs (b)(2)
and (c)(3) of this section for rules and
examples regarding other authorization
and certain notice requirements.)
(ii) Example. The rule of this
paragraph (a)(4) is illustrated by the
following example:
Example. (i) Facts. In the case of a delivery
by cesarean section, a group health plan
subject to the requirements of this section
automatically provides benefits for any
hospital length of stay of up to 72 hours. For
any longer stay, the plan requires an
attending provider to complete a certificate of
medical necessity. The plan then makes a
determination, based on the certificate of
medical necessity, whether a longer stay is
medically necessary.
(ii) Conclusion. In this Example, the
requirement that an attending provider
complete a certificate of medical necessity to
obtain authorization for the period between
72 hours and 96 hours following a delivery
by cesarean section is prohibited by this
paragraph (a)(4).
(5) Exceptions—(i) Discharge of
mother. If a decision to discharge a
mother earlier than the period specified
in paragraph (a)(1) of this section is
made by an attending provider, in
consultation with the mother, the
requirements of paragraph (a)(1) of this
section do not apply for any period after
the discharge.
(ii) Discharge of newborn. If a
decision to discharge a newborn child
earlier than the period specified in
paragraph (a)(1) of this section is made
by an attending provider, in
consultation with the mother (or the
newborn’s authorized representative),
the requirements of paragraph (a)(1) of
this section do not apply for any period
after the discharge.
(iii) Attending provider defined. For
purposes of this section, attending
provider means an individual who is
licensed under applicable state law to
provide maternity or pediatric care and
who is directly responsible for
providing maternity or pediatric care to
a mother or newborn child. Therefore, a
plan, hospital, managed care
organization, or other issuer is not an
attending provider.
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(iv) Example. The rules of this
paragraph (a)(5) are illustrated by the
following example:
Example. (i) Facts. A pregnant woman
covered under a group health plan subject to
the requirements of this section goes into
labor and is admitted to a hospital. She gives
birth by cesarean section. On the third day
after the delivery, the attending provider for
the mother consults with the mother, and the
attending provider for the newborn consults
with the mother regarding the newborn. The
attending providers authorize the early
discharge of both the mother and the
newborn. Both are discharged approximately
72 hours after the delivery. The plan pays for
the 72-hour hospital stays.
(ii) Conclusion. In this Example, the
requirements of this paragraph (a) have been
satisfied with respect to the mother and the
newborn. If either is readmitted, the hospital
stay for the readmission is not subject to this
section.
(b) Prohibitions—(1) With respect to
mothers—(i) In general. A group health
plan may not—
(A) Deny a mother or her newborn
child eligibility or continued eligibility
to enroll or renew coverage under the
terms of the plan solely to avoid the
requirements of this section; or
(B) Provide payments (including
payments-in-kind) or rebates to a
mother to encourage her to accept less
than the minimum protections available
under this section.
(ii) Examples. The rules of this
paragraph (b)(1) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay following a vaginal
delivery. If a mother and newborn covered
under the plan are discharged within 24
hours after the delivery, the plan will waive
the copayment and deductible.
(ii) Conclusion. In this Example 1, because
waiver of the copayment and deductible is in
the nature of a rebate that the mother would
not receive if she and her newborn remained
in the hospital, it is prohibited by this
paragraph (b)(1). (In addition, the plan
violates paragraph (b)(2) of this section
because, in effect, no copayment or
deductible is required for the first portion of
the stay and a double copayment and a
deductible are required for the second
portion of the stay.)
Example 2. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay following a vaginal
delivery. In the event that a mother and her
newborn are discharged earlier than 48 hours
and the discharges occur after consultation
with the mother in accordance with the
requirements of paragraph (a)(5) of this
section, the plan provides for a follow-up
visit by a nurse within 48 hours after the
discharges to provide certain services that the
mother and her newborn would otherwise
receive in the hospital.
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(ii) Conclusion. In this Example 2, because
the follow-up visit does not provide any
services beyond what the mother and her
newborn would receive in the hospital,
coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit
restrictions—(i) In general. Subject to
paragraph (c)(3) of this section, a group
health plan may not restrict the benefits
for any portion of a hospital length of
stay specified in paragraph (a) of this
section in a manner that is less favorable
than the benefits provided for any
preceding portion of the stay.
(ii) Example. The rules of this
paragraph (b)(2) are illustrated by the
following example:
mstockstill on PROD1PC66 with RULES2
Example. (i) Facts. A group health plan
subject to the requirements of this section
provides benefits for hospital lengths of stay
in connection with childbirth. In the case of
a delivery by cesarean section, the plan
automatically pays for the first 48 hours.
With respect to each succeeding 24-hour
period, the participant or beneficiary must
call the plan to obtain precertification from
a utilization reviewer, who determines if an
additional 24-hour period is medically
necessary. If this approval is not obtained,
the plan will not provide benefits for any
succeeding 24-hour period.
(ii) Conclusion. In this Example, the
requirement to obtain precertification for the
two 24-hour periods immediately following
the initial 48-hour stay is prohibited by this
paragraph (b)(2) because benefits for the
latter part of the stay are restricted in a
manner that is less favorable than benefits for
a preceding portion of the stay. (However,
this section does not prohibit a plan from
requiring precertification for any period after
the first 96 hours.) In addition, the
requirement to obtain precertification from
the plan based on medical necessity for a
hospital length of stay within the 96-hour
period would also violate paragraph (a) of
this section.
(3) With respect to attending
providers. A group health plan may not
directly or indirectly—
(i) Penalize (for example, take
disciplinary action against or retaliate
against), or otherwise reduce or limit the
compensation of, an attending provider
because the provider furnished care to
a participant or beneficiary in
accordance with this section; or
(ii) Provide monetary or other
incentives to an attending provider to
induce the provider to furnish care to a
participant or beneficiary in a manner
inconsistent with this section, including
providing any incentive that could
induce an attending provider to
discharge a mother or newborn earlier
than 48 hours (or 96 hours) after
delivery.
(c) Construction. With respect to this
section, the following rules of
construction apply:
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(1) Hospital stays not mandatory. This
section does not require a mother to—
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed
period of time following the birth of her
child.
(2) Hospital stay benefits not
mandated. This section does not apply
to any group health plan that does not
provide benefits for hospital lengths of
stay in connection with childbirth for a
mother or her newborn child.
(3) Cost-sharing rules—(i) In general.
This section does not prevent a group
health plan from imposing deductibles,
coinsurance, or other cost-sharing in
relation to benefits for hospital lengths
of stay in connection with childbirth for
a mother or a newborn under the plan
or coverage, except that the coinsurance
or other cost-sharing for any portion of
the hospital length of stay specified in
paragraph (a) of this section may not be
greater than that for any preceding
portion of the stay.
(ii) Examples. The rules of this
paragraph (c)(3) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay in connection with
vaginal deliveries. The plan covers 80
percent of the cost of the stay for the first 24hour period and 50 percent of the cost of the
stay for the second 24-hour period. Thus, the
coinsurance paid by the patient increases
from 20 percent to 50 percent after 24 hours.
(ii) Conclusion. In this Example 1, the plan
violates the rules of this paragraph (c)(3)
because coinsurance for the second 24-hour
period of the 48-hour stay is greater than that
for the preceding portion of the stay. (In
addition, the plan also violates the similar
rule in paragraph (b)(2) of this section.)
Example 2. (i) Facts. A group health plan
generally covers 70 percent of the cost of a
hospital length of stay in connection with
childbirth. However, the plan will cover 80
percent of the cost of the stay if the
participant or beneficiary notifies the plan of
the pregnancy in advance of admission and
uses whatever hospital the plan may
designate.
(ii) Conclusion. In this Example 2, the plan
does not violate the rules of this paragraph
(c)(3) because the level of benefits provided
(70 percent or 80 percent) is consistent
throughout the 48-hour (or 96-hour) hospital
length of stay required under paragraph (a) of
this section. (In addition, the plan does not
violate the rules in paragraph (a)(4) or (b)(2)
of this section.)
(4) Compensation of attending
provider. This section does not prevent
a group health plan from negotiating
with an attending provider the level and
type of compensation for care furnished
in accordance with this section
(including paragraph (b) of this section).
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62421
(d) Notice requirement. See 29 CFR
2520.102–3(u) for rules relating to a
disclosure requirement imposed under
section 711(d) of ERISA (29 U.S.C. 1181)
on certain group health plans that
provide benefits for hospital lengths of
stay in connection with childbirth.
(e) Applicability in certain states—(1)
Health insurance coverage. The
requirements of section 9811 and this
section do not apply with respect to
health insurance coverage offered in
connection with a group health plan if
there is a state law regulating the
coverage that meets any of the following
criteria:
(i) The state law requires the coverage
to provide for at least a 48-hour hospital
length of stay following a vaginal
delivery and at least a 96-hour hospital
length of stay following a delivery by
cesarean section.
(ii) The state law requires the
coverage to provide for maternity and
pediatric care in accordance with
guidelines that relate to care following
childbirth established by the American
College of Obstetricians and
Gynecologists, the American Academy
of Pediatrics, or any other established
professional medical association.
(iii) The state law requires, in
connection with the coverage for
maternity care, that the hospital length
of stay for such care is left to the
decision of (or is required to be made
by) the attending provider in
consultation with the mother. State laws
that require the decision to be made by
the attending provider with the consent
of the mother satisfy the criterion of this
paragraph (e)(1)(iii).
(2) Group health plans—(i) Fullyinsured plans. For a group health plan
that provides benefits solely through
health insurance coverage, if the state
law regulating the health insurance
coverage meets any of the criteria in
paragraph (e)(1) of this section, then the
requirements of section 9811 and this
section do not apply.
(ii) Self-insured plans. For a group
health plan that provides all benefits for
hospital lengths of stay in connection
with childbirth other than through
health insurance coverage, the
requirements of section 9811 and this
section apply.
(iii) Partially-insured plans. For a
group health plan that provides some
benefits through health insurance
coverage, if the state law regulating the
health insurance coverage meets any of
the criteria in paragraph (e)(1) of this
section, then the requirements of section
9811 and this section apply only to the
extent the plan provides benefits for
hospital lengths of stay in connection
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with childbirth other than through
health insurance coverage.
(3) Preemption provisions under
section 731(a) of ERISA. See 29 CFR
2590.711(e)(3) for a rule providing that
the preemption provisions contained in
section 731(a)(1) of ERISA and 29 CFR
2590.731(a) do not supersede a state law
if the state law is described in paragraph
(e)(1) of 29 CFR 2590.711 (which is
substantially similar to paragraph (e)(1)
of this section).
(4) Examples. The rules of this
paragraph (e) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan
buys group health insurance coverage in a
state that requires that the coverage provide
for at least a 48-hour hospital length of stay
following a vaginal delivery and at least a 96hour hospital length of stay following a
delivery by cesarean section.
(ii) Conclusion. In this Example 1, the
coverage is subject to state law, and the
requirements of section 9811 and this section
do not apply.
Example 2. (i) Facts. A self-insured group
health plan covers hospital lengths of stay in
connection with childbirth in a state that
requires health insurance coverage to provide
for maternity and pediatric care in
accordance with guidelines that relate to care
following childbirth established by the
American College of Obstetricians and
Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. In this Example 2, even
though the state law satisfies the criterion of
paragraph (e)(1)(ii) of this section, because
the plan provides benefits for hospital
lengths of stay in connection with childbirth
other than through health insurance
coverage, the plan is subject to the
requirements of section 9811 and this
section.
(f) Effective/applicability date. This
section applies to group health plans for
plan years beginning on or after January
1, 2009.
§ 54.9811–1T
[Removed]
■ Par. 5. Section 54.9811–1T is
removed.
§ 54.9831–1
[Amended]
mstockstill on PROD1PC66 with RULES2
■ Par. 6. Section 54.9831–1(b) is
amended by removing the language
‘‘54.9811–1T’’ and adding ‘‘54.9811–1’’
in its place.
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Approved: September 23, 2008.
Linda E. Stiff,
Deputy Commissioner for Services and
Enforcement, Internal Revenue Service.
Eric Solomon,
Assistant Secretary of the Treasury (Tax
Policy).
Employee Benefits Security
Administration
29 CFR Chapter XXV
For the reasons set forth above, 29
CFR Part 2590 is amended as follows:
■
PART 2590—RULES AND
REGULATIONS FOR GROUP HEALTH
PLANS
1. The authority citation for Part 2590
continues to read as follows:
■
Authority: 29 U.S.C. 1027, 1059, 1135,
1161–1168, 1169, 1181–1183, 1181 note,
1185, 1185a, 1185b, 1191, 1191a, 1191b, and
1191c, sec. 101(g), Public Law 104–191, 110
Stat. 1936; sec. 401(b), Public Law 105–200,
112 Stat. 645 (42 U.S.C. 651 note); Secretary
of Labor’s Order 1–2003, 68 FR 5374 (Feb. 3,
2003).
2. Section 2590.711 is revised to read
as follows:
■
§ 2590.711 Standards relating to benefits
for mothers and newborns.
(a) Hospital length of stay—(1)
General rule. Except as provided in
paragraph (a)(5) of this section, a group
health plan, or a health insurance issuer
offering group health insurance
coverage, that provides benefits for a
hospital length of stay in connection
with childbirth for a mother or her
newborn may not restrict benefits for
the stay to less than—
(i) 48 hours following a vaginal
delivery; or
(ii) 96 hours following a delivery by
cesarean section.
(2) When stay begins—(i) Delivery in
a hospital. If delivery occurs in a
hospital, the hospital length of stay for
the mother or newborn child begins at
the time of delivery (or in the case of
multiple births, at the time of the last
delivery).
(ii) Delivery outside a hospital. If
delivery occurs outside a hospital, the
hospital length of stay begins at the time
the mother or newborn is admitted as a
hospital inpatient in connection with
childbirth. The determination of
whether an admission is in connection
with childbirth is a medical decision to
be made by the attending provider.
(3) Examples. The rules of paragraphs
(a)(1) and (2) of this section are
illustrated by the following examples. In
each example, the group health plan
provides benefits for hospital lengths of
stay in connection with childbirth and
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is subject to the requirements of this
section, as follows:
Example 1. (i) Facts. A pregnant woman
covered under a group health plan goes into
labor and is admitted to the hospital at 10
p.m. on June 11. She gives birth by vaginal
delivery at 6 a.m. on June 12.
(ii) Conclusion. In this Example 1, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 6 a.m. on June 14.
Example 2. (i) Facts. A woman covered
under a group health plan gives birth at home
by vaginal delivery. After the delivery, the
woman begins bleeding excessively in
connection with the childbirth and is
admitted to the hospital for treatment of the
excessive bleeding at 7 p.m. on October 1.
(ii) Conclusion. In this Example 2, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 7 p.m. on October 3.
Example 3. (i) Facts. A woman covered
under a group health plan gives birth by
vaginal delivery at home. The child later
develops pneumonia and is admitted to the
hospital. The attending provider determines
that the admission is not in connection with
childbirth.
(ii) Conclusion. In this Example 3, the
hospital length-of-stay requirements of this
section do not apply to the child’s admission
to the hospital because the admission is not
in connection with childbirth.
(4) Authorization not required—(i) In
general. A plan or issuer is prohibited
from requiring that a physician or other
health care provider obtain
authorization from the plan or issuer for
prescribing the hospital length of stay
specified in paragraph (a)(1) of this
section. (See also paragraphs (b)(2) and
(c)(3) of this section for rules and
examples regarding other authorization
and certain notice requirements.)
(ii) Example. The rule of this
paragraph (a)(4) is illustrated by the
following example:
Example. (i) Facts. In the case of a delivery
by cesarean section, a group health plan
subject to the requirements of this section
automatically provides benefits for any
hospital length of stay of up to 72 hours. For
any longer stay, the plan requires an
attending provider to complete a certificate of
medical necessity. The plan then makes a
determination, based on the certificate of
medical necessity, whether a longer stay is
medically necessary.
(ii) Conclusion. In this Example, the
requirement that an attending provider
complete a certificate of medical necessity to
obtain authorization for the period between
72 hours and 96 hours following a delivery
by cesarean section is prohibited by this
paragraph (a)(4).
(5) Exceptions—(i) Discharge of
mother. If a decision to discharge a
mother earlier than the period specified
in paragraph (a)(1) of this section is
made by an attending provider, in
consultation with the mother, the
requirements of paragraph (a)(1) of this
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section do not apply for any period after
the discharge.
(ii) Discharge of newborn. If a
decision to discharge a newborn child
earlier than the period specified in
paragraph (a)(1) of this section is made
by an attending provider, in
consultation with the mother (or the
newborn’s authorized representative),
the requirements of paragraph (a)(1) of
this section do not apply for any period
after the discharge.
(iii) Attending provider defined. For
purposes of this section, attending
provider means an individual who is
licensed under applicable state law to
provide maternity or pediatric care and
who is directly responsible for
providing maternity or pediatric care to
a mother or newborn child. Therefore, a
plan, hospital, managed care
organization, or other issuer is not an
attending provider.
(iv) Example. The rules of this
paragraph (a)(5) are illustrated by the
following example:
mstockstill on PROD1PC66 with RULES2
Example. (i) Facts. A pregnant woman
covered under a group health plan subject to
the requirements of this section goes into
labor and is admitted to a hospital. She gives
birth by cesarean section. On the third day
after the delivery, the attending provider for
the mother consults with the mother, and the
attending provider for the newborn consults
with the mother regarding the newborn. The
attending providers authorize the early
discharge of both the mother and the
newborn. Both are discharged approximately
72 hours after the delivery. The plan pays for
the 72-hour hospital stays.
(ii) Conclusion. In this Example, the
requirements of this paragraph (a) have been
satisfied with respect to the mother and the
newborn. If either is readmitted, the hospital
stay for the readmission is not subject to this
section.
(b) Prohibitions—(1) With respect to
mothers—(i) In general. A group health
plan, and a health insurance issuer
offering group health insurance
coverage, may not—
(A) Deny a mother or her newborn
child eligibility or continued eligibility
to enroll or renew coverage under the
terms of the plan solely to avoid the
requirements of this section; or
(B) Provide payments (including
payments-in-kind) or rebates to a
mother to encourage her to accept less
than the minimum protections available
under this section.
(ii) Examples. The rules of this
paragraph (b)(1) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay following a vaginal
delivery. If a mother and newborn covered
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17:56 Oct 17, 2008
Jkt 217001
under the plan are discharged within 24
hours after the delivery, the plan will waive
the copayment and deductible.
(ii) Conclusion. In this Example 1, because
waiver of the copayment and deductible is in
the nature of a rebate that the mother would
not receive if she and her newborn remained
in the hospital, it is prohibited by this
paragraph (b)(1). (In addition, the plan
violates paragraph (b)(2) of this section
because, in effect, no copayment or
deductible is required for the first portion of
the stay and a double copayment and a
deductible are required for the second
portion of the stay.)
Example 2. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay following a vaginal
delivery. In the event that a mother and her
newborn are discharged earlier than 48 hours
and the discharges occur after consultation
with the mother in accordance with the
requirements of paragraph (a)(5) of this
section, the plan provides for a follow-up
visit by a nurse within 48 hours after the
discharges to provide certain services that the
mother and her newborn would otherwise
receive in the hospital.
(ii) Conclusion. In this Example 2, because
the follow-up visit does not provide any
services beyond what the mother and her
newborn would receive in the hospital,
coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit
restrictions—(i) In general. Subject to
paragraph (c)(3) of this section, a group
health plan, and a health insurance
issuer offering group health insurance
coverage, may not restrict the benefits
for any portion of a hospital length of
stay specified in paragraph (a) of this
section in a manner that is less favorable
than the benefits provided for any
preceding portion of the stay.
(ii) Example. The rules of this
paragraph (b)(2) are illustrated by the
following example:
Example. (i) Facts. A group health plan
subject to the requirements of this section
provides benefits for hospital lengths of stay
in connection with childbirth. In the case of
a delivery by cesarean section, the plan
automatically pays for the first 48 hours.
With respect to each succeeding 24-hour
period, the participant or beneficiary must
call the plan to obtain precertification from
a utilization reviewer, who determines if an
additional 24-hour period is medically
necessary. If this approval is not obtained,
the plan will not provide benefits for any
succeeding 24-hour period.
(ii) Conclusion. In this Example, the
requirement to obtain precertification for the
two 24-hour periods immediately following
the initial 48-hour stay is prohibited by this
paragraph (b)(2) because benefits for the
latter part of the stay are restricted in a
manner that is less favorable than benefits for
a preceding portion of the stay. (However,
this section does not prohibit a plan from
requiring precertification for any period after
the first 96 hours.) In addition, the
requirement to obtain precertification from
PO 00000
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62423
the plan based on medical necessity for a
hospital length of stay within the 96-hour
period would also violate paragraph (a) of
this section.
(3) With respect to attending
providers. A group health plan, and a
health insurance issuer offering group
health insurance coverage, may not
directly or indirectly—
(i) Penalize (for example, take
disciplinary action against or retaliate
against), or otherwise reduce or limit the
compensation of, an attending provider
because the provider furnished care to
a participant or beneficiary in
accordance with this section; or
(ii) Provide monetary or other
incentives to an attending provider to
induce the provider to furnish care to a
participant or beneficiary in a manner
inconsistent with this section, including
providing any incentive that could
induce an attending provider to
discharge a mother or newborn earlier
than 48 hours (or 96 hours) after
delivery.
(c) Construction. With respect to this
section, the following rules of
construction apply:
(1) Hospital stays not mandatory. This
section does not require a mother to—
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed
period of time following the birth of her
child.
(2) Hospital stay benefits not
mandated. This section does not apply
to any group health plan, or any group
health insurance coverage, that does not
provide benefits for hospital lengths of
stay in connection with childbirth for a
mother or her newborn child.
(3) Cost-sharing rules—(i) In general.
This section does not prevent a group
health plan or a health insurance issuer
offering group health insurance
coverage from imposing deductibles,
coinsurance, or other cost-sharing in
relation to benefits for hospital lengths
of stay in connection with childbirth for
a mother or a newborn under the plan
or coverage, except that the coinsurance
or other cost-sharing for any portion of
the hospital length of stay specified in
paragraph (a) of this section may not be
greater than that for any preceding
portion of the stay.
(ii) Examples. The rules of this
paragraph (c)(3) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay in connection with
vaginal deliveries. The plan covers 80
percent of the cost of the stay for the first 24hour period and 50 percent of the cost of the
stay for the second 24-hour period. Thus, the
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mstockstill on PROD1PC66 with RULES2
coinsurance paid by the patient increases
from 20 percent to 50 percent after 24 hours.
(ii) Conclusion. In this Example 1, the plan
violates the rules of this paragraph (c)(3)
because coinsurance for the second 24-hour
period of the 48-hour stay is greater than that
for the preceding portion of the stay. (In
addition, the plan also violates the similar
rule in paragraph (b)(2) of this section.)
Example 2. (i) Facts. A group health plan
generally covers 70 percent of the cost of a
hospital length of stay in connection with
childbirth. However, the plan will cover 80
percent of the cost of the stay if the
participant or beneficiary notifies the plan of
the pregnancy in advance of admission and
uses whatever hospital the plan may
designate.
(ii) Conclusion. In this Example 2, the plan
does not violate the rules of this paragraph
(c)(3) because the level of benefits provided
(70 percent or 80 percent) is consistent
throughout the 48-hour (or 96-hour) hospital
length of stay required under paragraph (a) of
this section. (In addition, the plan does not
violate the rules in paragraph (a)(4) or (b)(2)
of this section.)
(4) Compensation of attending
provider. This section does not prevent
a group health plan or a health
insurance issuer offering group health
insurance coverage from negotiating
with an attending provider the level and
type of compensation for care furnished
in accordance with this section
(including paragraph (b) of this section).
(d) Notice requirement. See 29 CFR
2520.102–3(u) (relating to the disclosure
requirement under section 711(d) of the
Act).
(e) Applicability in certain states—(1)
Health insurance coverage. The
requirements of section 711 of the Act
and this section do not apply with
respect to health insurance coverage
offered in connection with a group
health plan if there is a state law
regulating the coverage that meets any
of the following criteria:
(i) The state law requires the coverage
to provide for at least a 48-hour hospital
length of stay following a vaginal
delivery and at least a 96-hour hospital
length of stay following a delivery by
cesarean section.
(ii) The state law requires the
coverage to provide for maternity and
pediatric care in accordance with
guidelines that relate to care following
childbirth established by the American
College of Obstetricians and
Gynecologists, the American Academy
of Pediatrics, or any other established
professional medical association.
(iii) The state law requires, in
connection with the coverage for
maternity care, that the hospital length
of stay for such care is left to the
decision of (or is required to be made
by) the attending provider in
consultation with the mother. State laws
VerDate Aug<31>2005
17:56 Oct 17, 2008
Jkt 217001
that require the decision to be made by
the attending provider with the consent
of the mother satisfy the criterion of this
paragraph (e)(1)(iii).
(2) Group health plans—(i) Fullyinsured plans. For a group health plan
that provides benefits solely through
health insurance coverage, if the state
law regulating the health insurance
coverage meets any of the criteria in
paragraph (e)(1) of this section, then the
requirements of section 711 of the Act
and this section do not apply.
(ii) Self-insured plans. For a group
health plan that provides all benefits for
hospital lengths of stay in connection
with childbirth other than through
health insurance coverage, the
requirements of section 711 of the Act
and this section apply.
(iii) Partially-insured plans. For a
group health plan that provides some
benefits through health insurance
coverage, if the state law regulating the
health insurance coverage meets any of
the criteria in paragraph (e)(1) of this
section, then the requirements of section
711 of the Act and this section apply
only to the extent the plan provides
benefits for hospital lengths of stay in
connection with childbirth other than
through health insurance coverage.
(3) Relation to section 731(a) of the
Act. The preemption provisions
contained in section 731(a)(1) of the Act
and Sec. 2590.731(a) do not supersede
a state law described in paragraph (e)(1)
of this section.
(4) Examples. The rules of this
paragraph (e) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan
buys group health insurance coverage in a
state that requires that the coverage provide
for at least a 48-hour hospital length of stay
following a vaginal delivery and at least a 96hour hospital length of stay following a
delivery by cesarean section.
(ii) Conclusion. In this Example 1, the
coverage is subject to state law, and the
requirements of section 711 of the Act and
this section do not apply.
Example 2. (i) Facts. A self-insured group
health plan covers hospital lengths of stay in
connection with childbirth in a state that
requires health insurance coverage to provide
for maternity and pediatric care in
accordance with guidelines that relate to care
following childbirth established by the
American College of Obstetricians and
Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. In this Example 2, even
though the state law satisfies the criterion of
paragraph (e)(1)(ii) of this section, because
the plan provides benefits for hospital
lengths of stay in connection with childbirth
other than through health insurance
coverage, the plan is subject to the
requirements of section 711 of the Act and
this section.
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(f) Applicability date. This section
applies to group health plans, and
health insurance issuers offering group
health insurance coverage, for plan
years beginning on or after January 1,
2009.
Signed at Washington, DC this 2nd day of
October, 2008.
Bradford P. Campbell,
Assistant Secretary, Employee Benefits
Security Administration, U.S. Department of
Labor.
Adoption of Amendments to the
Regulations
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR SUBTITLE A, SUBCHAPTER B
45 CFR subtitle A, subchapter B, is
amended as set forth below:
■
PART 146—REQUIREMENTS FOR THE
GROUP HEALTH INSURANCE
MARKET
1. The authority citation for part 146
continues to read as follows:
■
Authority: Secs. 2701 through 2763, 2791,
and 2792 of the PHS Act (42 U.S.C. 300gg
through 300gg–63, 300gg–91, and 300gg–92).
2. Section 146.130 is revised to read
as follows:
■
§ 146.130 Standards relating to benefits
for mothers and newborns.
(a) Hospital length of stay—(1)
General rule. Except as provided in
paragraph (a)(5) of this section, a group
health plan, or a health insurance issuer
offering group health insurance
coverage, that provides benefits for a
hospital length of stay in connection
with childbirth for a mother or her
newborn may not restrict benefits for
the stay to less than—
(i) 48 hours following a vaginal
delivery; or
(ii) 96 hours following a delivery by
cesarean section.
(2) When stay begins—(i) Delivery in
a hospital. If delivery occurs in a
hospital, the hospital length of stay for
the mother or newborn child begins at
the time of delivery (or in the case of
multiple births, at the time of the last
delivery).
(ii) Delivery outside a hospital. If
delivery occurs outside a hospital, the
hospital length of stay begins at the time
the mother or newborn is admitted as a
hospital inpatient in connection with
childbirth. The determination of
whether an admission is in connection
with childbirth is a medical decision to
be made by the attending provider.
(3) Examples. The rules of paragraphs
(a)(1) and (2) of this section are
illustrated by the following examples. In
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each example, the group health plan
provides benefits for hospital lengths of
stay in connection with childbirth and
is subject to the requirements of this
section, as follows:
Example 1. (i) Facts. A pregnant woman
covered under a group health plan goes into
labor and is admitted to the hospital at 10
p.m. on June 11. She gives birth by vaginal
delivery at 6 a.m. on June 12.
(ii) Conclusion. In this Example 1, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 6 a.m. on June 14.
Example 2. (i) Facts. A woman covered
under a group health plan gives birth at home
by vaginal delivery. After the delivery, the
woman begins bleeding excessively in
connection with the childbirth and is
admitted to the hospital for treatment of the
excessive bleeding at 7 p.m. on October 1.
(ii) Conclusion. In this Example 2, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 7 p.m. on October 3.
Example 3. (i) Facts. A woman covered
under a group health plan gives birth by
vaginal delivery at home. The child later
develops pneumonia and is admitted to the
hospital. The attending provider determines
that the admission is not in connection with
childbirth.
(ii) Conclusion. In this Example 3, the
hospital length-of-stay requirements of this
section do not apply to the child’s admission
to the hospital because the admission is not
in connection with childbirth.
mstockstill on PROD1PC66 with RULES2
(4) Authorization not required—(i) In
general. A plan or issuer is prohibited
from requiring that a physician or other
health care provider obtain
authorization from the plan or issuer for
prescribing the hospital length of stay
specified in paragraph (a)(1) of this
section. (See also paragraphs (b)(2) and
(c)(3) of this section for rules and
examples regarding other authorization
and certain notice requirements.)
(ii) Example. The rule of this
paragraph (a)(4) is illustrated by the
following example:
Example. (i) Facts. In the case of a delivery
by cesarean section, a group health plan
subject to the requirements of this section
automatically provides benefits for any
hospital length of stay of up to 72 hours. For
any longer stay, the plan requires an
attending provider to complete a certificate of
medical necessity. The plan then makes a
determination, based on the certificate of
medical necessity, whether a longer stay is
medically necessary.
(ii) Conclusion. In this Example, the
requirement that an attending provider
complete a certificate of medical necessity to
obtain authorization for the period between
72 hours and 96 hours following a delivery
by cesarean section is prohibited by this
paragraph (a)(4).
(5) Exceptions—(i) Discharge of
mother. If a decision to discharge a
mother earlier than the period specified
in paragraph (a)(1) of this section is
made by an attending provider, in
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consultation with the mother, the
requirements of paragraph (a)(1) of this
section do not apply for any period after
the discharge.
(ii) Discharge of newborn. If a
decision to discharge a newborn child
earlier than the period specified in
paragraph (a)(1) of this section is made
by an attending provider, in
consultation with the mother (or the
newborn’s authorized representative),
the requirements of paragraph (a)(1) of
this section do not apply for any period
after the discharge.
(iii) Attending provider defined. For
purposes of this section, attending
provider means an individual who is
licensed under applicable state law to
provide maternity or pediatric care and
who is directly responsible for
providing maternity or pediatric care to
a mother or newborn child. Therefore, a
plan, hospital, managed care
organization, or other issuer is not an
attending provider.
(iv) Example. The rules of this
paragraph (a)(5) are illustrated by the
following example:
Example. (i) Facts. A pregnant woman
covered under a group health plan subject to
the requirements of this section goes into
labor and is admitted to a hospital. She gives
birth by cesarean section. On the third day
after the delivery, the attending provider for
the mother consults with the mother, and the
attending provider for the newborn consults
with the mother regarding the newborn. The
attending providers authorize the early
discharge of both the mother and the
newborn. Both are discharged approximately
72 hours after the delivery. The plan pays for
the 72-hour hospital stays.
(ii) Conclusion. In this Example, the
requirements of this paragraph (a) have been
satisfied with respect to the mother and the
newborn. If either is readmitted, the hospital
stay for the readmission is not subject to this
section.
(b) Prohibitions—(1) With respect to
mothers—(i) In general. A group health
plan, and a health insurance issuer
offering group health insurance
coverage, may not—
(A) Deny a mother or her newborn
child eligibility or continued eligibility
to enroll or renew coverage under the
terms of the plan solely to avoid the
requirements of this section; or
(B) Provide payments (including
payments-in-kind) or rebates to a
mother to encourage her to accept less
than the minimum protections available
under this section.
(ii) Examples. The rules of this
paragraph (b)(1) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
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hospital length of stay following a vaginal
delivery. If a mother and newborn covered
under the plan are discharged within 24
hours after the delivery, the plan will waive
the copayment and deductible.
(ii) Conclusion. In this Example 1, because
waiver of the copayment and deductible is in
the nature of a rebate that the mother would
not receive if she and her newborn remained
in the hospital, it is prohibited by this
paragraph (b)(1). (In addition, the plan
violates paragraph (b)(2) of this section
because, in effect, no copayment or
deductible is required for the first portion of
the stay and a double copayment and a
deductible are required for the second
portion of the stay.)
Example 2. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay following a vaginal
delivery. In the event that a mother and her
newborn are discharged earlier than 48 hours
and the discharges occur after consultation
with the mother in accordance with the
requirements of paragraph (a)(5) of this
section, the plan provides for a follow-up
visit by a nurse within 48 hours after the
discharges to provide certain services that the
mother and her newborn would otherwise
receive in the hospital.
(ii) Conclusion. In this Example 2, because
the follow-up visit does not provide any
services beyond what the mother and her
newborn would receive in the hospital,
coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit
restrictions—(i) In general. Subject to
paragraph (c)(3) of this section, a group
health plan, and a health insurance
issuer offering group health insurance
coverage, may not restrict the benefits
for any portion of a hospital length of
stay specified in paragraph (a) of this
section in a manner that is less favorable
than the benefits provided for any
preceding portion of the stay.
(ii) Example. The rules of this
paragraph (b)(2) are illustrated by the
following example:
Example. (i) Facts. A group health plan
subject to the requirements of this section
provides benefits for hospital lengths of stay
in connection with childbirth. In the case of
a delivery by cesarean section, the plan
automatically pays for the first 48 hours.
With respect to each succeeding 24-hour
period, the participant or beneficiary must
call the plan to obtain precertification from
a utilization reviewer, who determines if an
additional 24-hour period is medically
necessary. If this approval is not obtained,
the plan will not provide benefits for any
succeeding 24-hour period.
(ii) Conclusion. In this Example, the
requirement to obtain precertification for the
two 24-hour periods immediately following
the initial 48-hour stay is prohibited by this
paragraph (b)(2) because benefits for the
latter part of the stay are restricted in a
manner that is less favorable than benefits for
a preceding portion of the stay. (However,
this section does not prohibit a plan from
requiring precertification for any period after
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the first 96 hours.) In addition, the
requirement to obtain precertification from
the plan based on medical necessity for a
hospital length of stay within the 96-hour
period would also violate paragraph (a) of
this section.
(3) With respect to attending
providers. A group health plan, and a
health insurance issuer offering group
health insurance coverage, may not
directly or indirectly—
(i) Penalize (for example, take
disciplinary action against or retaliate
against), or otherwise reduce or limit the
compensation of, an attending provider
because the provider furnished care to
a participant or beneficiary in
accordance with this section; or
(ii) Provide monetary or other
incentives to an attending provider to
induce the provider to furnish care to a
participant or beneficiary in a manner
inconsistent with this section, including
providing any incentive that could
induce an attending provider to
discharge a mother or newborn earlier
than 48 hours (or 96 hours) after
delivery.
(c) Construction. With respect to this
section, the following rules of
construction apply:
(1) Hospital stays not mandatory. This
section does not require a mother to—
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed
period of time following the birth of her
child.
(2) Hospital stay benefits not
mandated. This section does not apply
to any group health plan, or any group
health insurance coverage, that does not
provide benefits for hospital lengths of
stay in connection with childbirth for a
mother or her newborn child.
(3) Cost-sharing rules—(i) In general.
This section does not prevent a group
health plan or a health insurance issuer
offering group health insurance
coverage from imposing deductibles,
coinsurance, or other cost-sharing in
relation to benefits for hospital lengths
of stay in connection with childbirth for
a mother or a newborn under the plan
or coverage, except that the coinsurance
or other cost-sharing for any portion of
the hospital length of stay specified in
paragraph (a) of this section may not be
greater than that for any preceding
portion of the stay.
(ii) Examples. The rules of this
paragraph (c)(3) are illustrated by the
following examples. In each example,
the group health plan is subject to the
requirements of this section, as follows:
Example 1. (i) Facts. A group health plan
provides benefits for at least a 48-hour
hospital length of stay in connection with
vaginal deliveries. The plan covers 80
percent of the cost of the stay for the first 24-
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hour period and 50 percent of the cost of the
stay for the second 24-hour period. Thus, the
coinsurance paid by the patient increases
from 20 percent to 50 percent after 24 hours.
(ii) Conclusion. In this Example 1, the plan
violates the rules of this paragraph (c)(3)
because coinsurance for the second 24-hour
period of the 48-hour stay is greater than that
for the preceding portion of the stay. (In
addition, the plan also violates the similar
rule in paragraph (b)(2) of this section.)
Example 2. (i) Facts. A group health plan
generally covers 70 percent of the cost of a
hospital length of stay in connection with
childbirth. However, the plan will cover
80 percent of the cost of the stay if the
participant or beneficiary notifies the plan of
the pregnancy in advance of admission and
uses whatever hospital the plan may
designate.
(ii) Conclusion. In this Example 2, the plan
does not violate the rules of this paragraph
(c)(3) because the level of benefits provided
(70 percent or 80 percent) is consistent
throughout the 48-hour (or 96-hour) hospital
length of stay required under paragraph (a) of
this section. (In addition, the plan does not
violate the rules in paragraph (a)(4) or (b)(2)
of this section.)
(4) Compensation of attending
provider. This section does not prevent
a group health plan or a health
insurance issuer offering group health
insurance coverage from negotiating
with an attending provider the level and
type of compensation for care furnished
in accordance with this section
(including paragraph (b) of this section).
(d) Notice requirement. Except as
provided in paragraph (d)(4) of this
section, a group health plan that
provides benefits for hospital lengths of
stay in connection with childbirth must
meet the following requirements:
(1) Required statement. The plan
document that provides a description of
plan benefits to participants and
beneficiaries, or that notifies
participants and beneficiaries of plan
benefit changes, must disclose
information that notifies participants
and beneficiaries of their rights under
this section.
(2) Disclosure notice. To meet the
disclosure requirement set forth in
paragraph (d)(1) of this section, the
following disclosure notice must be
used:
Statement of Rights Under the Newborns’
and Mothers’ Health Protection Act
Under federal law, group health plans and
health insurance issuers offering group
health insurance coverage generally may not
restrict benefits for any hospital length of
stay in connection with childbirth for the
mother or newborn child to less than 48
hours following a vaginal delivery, or less
than 96 hours following a delivery by
cesarean section. However, the plan or issuer
may pay for a shorter stay if the attending
provider (e.g., your physician, nurse
midwife, or physician assistant), after
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consultation with the mother, discharges the
mother or newborn earlier.
Also, under federal law, plans and issuers
may not set the level of benefits or out-ofpocket costs so that any later portion of the
48-hour (or 96-hour) stay is treated in a
manner less favorable to the mother or
newborn than any earlier portion of the stay.
In addition, a plan or issuer may not, under
federal law, require that a physician or other
health care provider obtain authorization for
prescribing a length of stay of up to 48 hours
(or 96 hours). However, to use certain
providers or facilities, or to reduce your outof-pocket costs, you may be required to
obtain precertification. For information on
precertification, contact your plan
administrator.
(3) Timing of disclosure. The
disclosure notice in paragraph (d)(2) of
this section shall be furnished to each
participant covered under a group
health plan, and each beneficiary
receiving benefits under a group health
plan, not later than 60 days after the
first day of the first plan year beginning
on or after January 1, 2009. Each time
a plan distributes one or both of the
documents described in paragraph (d)(1)
to participants and beneficiaries after
providing this initial notice, the
disclosure notice in paragraph (d)(2)
must appear in at least one of those
documents.
(4) Exceptions. The requirements of
this paragraph (d) do not apply in the
following situations.
(i) Self-insured plans that have
already provided notice. If benefits for
hospital lengths of stay in connection
with childbirth are not provided
through health insurance coverage, and
the group health plan has already
provided an initial notice that complies
with paragraphs (d)(1) and (d)(2) of this
section, the group health plan is not
automatically required to provide
another such notice to participants and
beneficiaries who have been provided
with the initial notice. However,
following the effective date of these
regulations, whenever such a plan
provides one or both of the documents
described in paragraph (d)(1) of this
section to participants and beneficiaries,
the disclosure notice in paragraph (d)(2)
of this section must appear in at least
one of those documents.
(ii) Self-insured plans that have
elected exemption from this section. If
benefits for hospital lengths of stay in
connection with childbirth are not
provided through health insurance
coverage, and the group health plan has
made the election described in
§ 146.180 to be exempted from the
requirements of this section, the group
health plan is not subject to this
paragraph (d).
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(iii) Insured plans. If benefits for
hospital lengths of stay in connection
with childbirth are provided through
health insurance coverage, and the
coverage is regulated under a State law
described in paragraph (e) of this
section, the group health plan is not
subject to this paragraph (d).
(e) Applicability in certain states—(1)
Health insurance coverage. The
requirements of section 2704 of the PHS
Act and this section do not apply with
respect to health insurance coverage
offered in connection with a group
health plan if there is a state law
regulating the coverage that meets any
of the following criteria:
(i) The state law requires the coverage
to provide for at least a 48-hour hospital
length of stay following a vaginal
delivery and at least a 96-hour hospital
length of stay following a delivery by
cesarean section.
(ii) The state law requires the
coverage to provide for maternity and
pediatric care in accordance with
guidelines that relate to care following
childbirth established by the American
College of Obstetricians and
Gynecologists, the American Academy
of Pediatrics, or any other established
professional medical association.
(iii) The state law requires, in
connection with the coverage for
maternity care, that the hospital length
of stay for such care is left to the
decision of (or is required to be made
by) the attending provider in
consultation with the mother. State laws
that require the decision to be made by
the attending provider with the consent
of the mother satisfy the criterion of this
paragraph (e)(1)(iii).
(2) Group health plans—(i) Fullyinsured plans. For a group health plan
that provides benefits solely through
health insurance coverage, if the state
law regulating the health insurance
coverage meets any of the criteria in
paragraph (e)(1) of this section, then the
requirements of section 2704 of the PHS
Act and this section do not apply.
(ii) Self-insured plans. For a group
health plan that provides all benefits for
hospital lengths of stay in connection
with childbirth other than through
health insurance coverage, the
requirements of section 2704 of the PHS
Act and this section apply.
(iii) Partially-insured plans. For a
group health plan that provides some
benefits through health insurance
coverage, if the state law regulating the
health insurance coverage meets any of
the criteria in paragraph (e)(1) of this
section, then the requirements of section
2704 of the PHS Act and this section
apply only to the extent the plan
provides benefits for hospital lengths of
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stay in connection with childbirth other
than through health insurance coverage.
(3) Relation to section 2723(a) of the
PHS Act. The preemption provisions
contained in section 2723(a)(1) of the
PHS Act and § 146.143(a) do not
supersede a state law described in
paragraph (e)(1) of this section.
(4) Examples. The rules of this
paragraph (e) are illustrated by the
following examples:
Example 1. (i) Facts. A group health plan
buys group health insurance coverage in a
state that requires that the coverage provide
for at least a 48-hour hospital length of stay
following a vaginal delivery and at least a 96hour hospital length of stay following a
delivery by cesarean section.
(ii) Conclusion. In this Example 1, the
coverage is subject to state law, and the
requirements of section 2704 of the PHS Act
and this section do not apply.
Example 2. (i) Facts. A self-insured group
health plan covers hospital lengths of stay in
connection with childbirth in a state that
requires health insurance coverage to provide
for maternity and pediatric care in
accordance with guidelines that relate to care
following childbirth established by the
American College of Obstetricians and
Gynecologists and the American Academy of
Pediatrics.
(ii) Conclusion. In this Example 2, even
though the state law satisfies the criterion of
paragraph (e)(1)(ii) of this section, because
the plan provides benefits for hospital
lengths of stay in connection with childbirth
other than through health insurance
coverage, the plan is subject to the
requirements of section 2704 of the PHS Act
and this section.
(f) Applicability date. Section 2704 of
the PHS Act applies to group health
plans, and health insurance issuers
offering group health insurance
coverage, for plan years beginning on or
after January 1, 1998. This section
applies to group health plans, and
health insurance issuers offering group
health insurance coverage, for plan
years beginning on or after January 1,
2009.
PART 148—REQUIREMENTS FOR THE
INDIVIDUAL HEALTH INSURANCE
MARKET
3. The authority citation for part 148
continues to read as follows:
■
Authority: Secs. 2741 through 2763, 2791,
and 2792 of the Public Health Service Act (42
U.S.C. 300gg–41 through 300gg–63, 300gg–
91, and 300gg–92).
4. Section 148.170 is revised to read
as follows:
■
§ 148.170 Standards relating to benefits
for mothers and newborns.
(a) Hospital length of stay—(1)
General rule. Except as provided in
paragraph (a)(5) of this section, an issuer
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62427
offering health insurance coverage in
the individual market that provides
benefits for a hospital length of stay in
connection with childbirth for a mother
or her newborn may not restrict benefits
for the stay to less than—
(i) 48 hours following a vaginal
delivery; or
(ii) 96 hours following a delivery by
cesarean section.
(2) When stay begins—(i) Delivery in
a hospital. If delivery occurs in a
hospital, the hospital length of stay for
the mother or newborn child begins at
the time of delivery (or in the case of
multiple births, at the time of the last
delivery).
(ii) Delivery outside a hospital. If
delivery occurs outside a hospital, the
hospital length of stay begins at the time
the mother or newborn is admitted as a
hospital inpatient in connection with
childbirth. The determination of
whether an admission is in connection
with childbirth is a medical decision to
be made by the attending provider.
(3) Examples. The rules of paragraphs
(a)(1) and (2) of this section are
illustrated by the following examples. In
each example, the issuer provides
benefits for hospital lengths of stay in
connection with childbirth and is
subject to the requirements of this
section, as follows:
Example 1. (i) Facts. A pregnant woman
covered under a policy issued in the
individual market goes into labor and is
admitted to the hospital at 10 p.m. on June
11. She gives birth by vaginal delivery at 6
a.m. on June 12.
(ii) Conclusion. In this Example 1, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 6 a.m. on June 14.
Example 2. (i) Facts. A woman covered
under a policy issued in the individual
market gives birth at home by vaginal
delivery. After the delivery, the woman
begins bleeding excessively in connection
with the childbirth and is admitted to the
hospital for treatment of the excessive
bleeding at 7 p.m. on October 1.
(ii) Conclusion. In this Example 2, the 48hour period described in paragraph (a)(1)(i)
of this section ends at 7 p.m. on October 3.
Example 3. (i) Facts. A woman covered
under a policy issued in the individual
market gives birth by vaginal delivery at
home. The child later develops pneumonia
and is admitted to the hospital. The attending
provider determines that the admission is not
in connection with childbirth.
(ii) Conclusion. In this Example 3, the
hospital length-of-stay requirements of this
section do not apply to the child’s admission
to the hospital because the admission is not
in connection with childbirth.
(4) Authorization not required—(i) In
general. An issuer is prohibited from
requiring that a physician or other
health care provider obtain
authorization from the issuer for
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prescribing the hospital length of stay
specified in paragraph (a)(1) of this
section. (See also paragraphs (b)(2) and
(c)(3) of this section for rules and
examples regarding other authorization
and certain notice requirements.)
(ii) Example. The rule of this
paragraph (a)(4) is illustrated by the
following example:
mother and the newborn. Both are discharged
approximately 72 hours after the delivery.
The issuer pays for the 72-hour hospital
stays.
(ii) Conclusion. In this Example, the
requirements of this paragraph (a) have been
satisfied with respect to the mother and the
newborn. If either is readmitted, the hospital
stay for the readmission is not subject to this
section.
Example. (i) Facts. In the case of a delivery
by cesarean section, an issuer subject to the
requirements of this section automatically
provides benefits for any hospital length of
stay of up to 72 hours. For any longer stay,
the issuer requires an attending provider to
complete a certificate of medical necessity.
The issuer then makes a determination, based
on the certificate of medical necessity,
whether a longer stay is medically necessary.
(ii) Conclusion. In this Example, the
requirement that an attending provider
complete a certificate of medical necessity to
obtain authorization for the period between
72 hours and 96 hours following a delivery
by cesarean section is prohibited by this
paragraph (a)(4).
(b) Prohibitions—(1) With respect to
mothers—(i) In general. An issuer
subject to the requirements of this
section may not—
(A) Deny a mother or her newborn
child eligibility or continued eligibility
to enroll in or renew coverage solely to
avoid the requirements of this section;
or
(B) Provide payments (including
payments-in-kind) or rebates to a
mother to encourage her to accept less
than the minimum protections available
under this section.
(ii) Examples. The rules of this
paragraph (b)(1) are illustrated by the
following examples. In each example,
the issuer is subject to the requirements
of this section, as follows:
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(5) Exceptions—(i) Discharge of
mother. If a decision to discharge a
mother earlier than the period specified
in paragraph (a)(1) of this section is
made by an attending provider, in
consultation with the mother, the
requirements of paragraph (a)(1) of this
section do not apply for any period after
the discharge.
(ii) Discharge of newborn. If a
decision to discharge a newborn child
earlier than the period specified in
paragraph (a)(1) of this section is made
by an attending provider, in
consultation with the mother (or the
newborn’s authorized representative),
the requirements of paragraph (a)(1) of
this section do not apply for any period
after the discharge.
(iii) Attending provider defined. For
purposes of this section, attending
provider means an individual who is
licensed under applicable state law to
provide maternity or pediatric care and
who is directly responsible for
providing maternity or pediatric care to
a mother or newborn child. Therefore,
an issuer, plan, hospital, or managed
care organization is not an attending
provider.
(iv) Example. The rules of this
paragraph (a)(5) are illustrated by the
following example:
Example. (i) Facts. A pregnant woman
covered under a policy offered by an issuer
subject to the requirements of this section
goes into labor and is admitted to a hospital.
She gives birth by cesarean section. On the
third day after the delivery, the attending
provider for the mother consults with the
mother, and the attending provider for the
newborn consults with the mother regarding
the newborn. The attending providers
authorize the early discharge of both the
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Example 1. (i) Facts. An issuer provides
benefits for at least a 48-hour hospital length
of stay following a vaginal delivery. If a
mother and newborn covered under a policy
issued in the individual market are
discharged within 24 hours after the delivery,
the issuer will waive the copayment and
deductible.
(ii) Conclusion. In this Example 1, because
waiver of the copayment and deductible is in
the nature of a rebate that the mother would
not receive if she and her newborn remained
in the hospital, it is prohibited by this
paragraph (b)(1). (In addition, the issuer
violates paragraph (b)(2) of this section
because, in effect, no copayment or
deductible is required for the first portion of
the stay and a double copayment and a
deductible are required for the second
portion of the stay.)
Example 2. (i) Facts. An issuer provides
benefits for at least a 48-hour hospital length
of stay following a vaginal delivery. In the
event that a mother and her newborn are
discharged earlier than 48 hours and the
discharges occur after consultation with the
mother in accordance with the requirements
of paragraph (a)(5) of this section, the issuer
provides for a follow-up visit by a nurse
within 48 hours after the discharges to
provide certain services that the mother and
her newborn would otherwise receive in the
hospital.
(ii) Conclusion. In this Example 2, because
the follow-up visit does not provide any
services beyond what the mother and her
newborn would receive in the hospital,
coverage for the follow-up visit is not
prohibited by this paragraph (b)(1).
(2) With respect to benefit
restrictions—(i) In general. Subject to
paragraph (c)(3) of this section, an issuer
may not restrict the benefits for any
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portion of a hospital length of stay
specified in paragraph (a) of this section
in a manner that is less favorable than
the benefits provided for any preceding
portion of the stay.
(ii) Example. The rules of this
paragraph (b)(2) are illustrated by the
following example:
Example. (i) Facts. An issuer subject to the
requirements of this section provides benefits
for hospital lengths of stay in connection
with childbirth. In the case of a delivery by
cesarean section, the issuer automatically
pays for the first 48 hours. With respect to
each succeeding 24-hour period, the covered
individual must call the issuer to obtain
precertification from a utilization reviewer,
who determines if an additional 24-hour
period is medically necessary. If this
approval is not obtained, the issuer will not
provide benefits for any succeeding 24-hour
period.
(ii) Conclusion. In this Example, the
requirement to obtain precertification for the
two 24-hour periods immediately following
the initial 48-hour stay is prohibited by this
paragraph (b)(2) because benefits for the
latter part of the stay are restricted in a
manner that is less favorable than benefits for
a preceding portion of the stay. (However,
this section does not prohibit an issuer from
requiring precertification for any period after
the first 96 hours.) In addition, the
requirement to obtain precertification from
the issuer based on medical necessity for a
hospital length of stay within the 96-hour
period would also violate paragraph (a) of
this section.
(3) With respect to attending
providers. An issuer may not directly or
indirectly—
(i) Penalize (for example, take
disciplinary action against or retaliate
against), or otherwise reduce or limit the
compensation of, an attending provider
because the provider furnished care to
a covered individual in accordance with
this section; or
(ii) Provide monetary or other
incentives to an attending provider to
induce the provider to furnish care to a
covered individual in a manner
inconsistent with this section, including
providing any incentive that could
induce an attending provider to
discharge a mother or newborn earlier
than 48 hours (or 96 hours) after
delivery.
(c) Construction. With respect to this
section, the following rules of
construction apply:
(1) Hospital stays not mandatory. This
section does not require a mother to—
(i) Give birth in a hospital; or
(ii) Stay in the hospital for a fixed
period of time following the birth of her
child.
(2) Hospital stay benefits not
mandated. This section does not apply
to any issuer that does not provide
benefits for hospital lengths of stay in
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Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 / Rules and Regulations
connection with childbirth for a mother
or her newborn child.
(3) Cost-sharing rules—(i) In general.
This section does not prevent an issuer
from imposing deductibles,
coinsurance, or other cost-sharing in
relation to benefits for hospital lengths
of stay in connection with childbirth for
a mother or a newborn under the
coverage, except that the coinsurance or
other cost-sharing for any portion of the
hospital length of stay specified in
paragraph (a) of this section may not be
greater than that for any preceding
portion of the stay.
(ii) Examples. The rules of this
paragraph (c)(3) are illustrated by the
following examples. In each example,
the issuer is subject to the requirements
of this section, as follows:
mstockstill on PROD1PC66 with RULES2
Example 1. (i) Facts. An issuer provides
benefits for at least a 48-hour hospital length
of stay in connection with vaginal deliveries.
The issuer covers 80 percent of the cost of
the stay for the first 24-hour period and 50
percent of the cost of the stay for the second
24-hour period. Thus, the coinsurance paid
by the patient increases from 20 percent to
50 percent after 24 hours.
(ii) Conclusion. In this Example 1, the
issuer violates the rules of this paragraph
(c)(3) because coinsurance for the second 24hour period of the 48-hour stay is greater
than that for the preceding portion of the
stay. (In addition, the issuer also violates the
similar rule in paragraph (b)(2) of this
section.)
Example 2. (i) Facts. An issuer generally
covers 70 percent of the cost of a hospital
length of stay in connection with childbirth.
However, the issuer will cover 80 percent of
the cost of the stay if the covered individual
notifies the issuer of the pregnancy in
advance of admission and uses whatever
hospital the issuer may designate.
(ii) Conclusion. In this Example 2, the
issuer does not violate the rules of this
paragraph (c)(3) because the level of benefits
provided (70 percent or 80 percent) is
consistent throughout the 48-hour (or 96hour) hospital length of stay required under
paragraph (a) of this section. (In addition, the
issuer does not violate the rules in paragraph
(a)(4) or (b)(2) of this section.)
(4) Compensation of attending
provider. This section does not prevent
an issuer from negotiating with an
attending provider the level and type of
compensation for care furnished in
accordance with this section (including
paragraph (b) of this section).
(5) Applicability. This section applies
to all health insurance coverage issued
in the individual market, and is not
limited in its application to coverage
that is provided to eligible individuals
VerDate Aug<31>2005
17:56 Oct 17, 2008
Jkt 217001
as defined in section 2741(b) of the PHS
Act.
(d) Notice requirement. Except as
provided in paragraph (d)(4) of this
section, an issuer offering health
insurance in the individual market must
meet the following requirements with
respect to benefits for hospital lengths of
stay in connection with childbirth:
(1) Required statement. The insurance
contract must disclose information that
notifies covered individuals of their
rights under this section.
(2) Disclosure notice. To meet the
disclosure requirements set forth in
paragraph (d)(1) of this section, the
following disclosure notice must be
used:
Statement of Rights Under the Newborns’
and Mothers’ Health Protection Act
Under federal law, health insurance issuers
generally may not restrict benefits for any
hospital length of stay in connection with
childbirth for the mother or newborn child to
less than 48 hours following a vaginal
delivery, or less than 96 hours following a
delivery by cesarean section. However, the
issuer may pay for a shorter stay if the
attending provider (e.g. , your physician,
nurse midwife, or physician assistant), after
consultation with the mother, discharges the
mother or newborn earlier.
Also, under federal law, issuers may not
set the level of benefits or out-of-pocket costs
so that any later portion of the 48-hour (or
96-hour) stay is treated in a manner less
favorable to the mother or newborn than any
earlier portion of the stay.
In addition, an issuer may not, under
federal law, require that a physician or other
health care provider obtain authorization for
prescribing a length of stay of up to 48 hours
(or 96 hours). However, to use certain
providers or facilities, or to reduce your outof-pocket costs, you may be required to
obtain precertification. For information on
precertification, contact your issuer.
(3) Timing of disclosure. The
disclosure notice in paragraph (d)(2) of
this section shall be furnished to the
covered individuals in the form of a
copy of the contract, or a rider (or
equivalent amendment to the contract)
no later than December 19, 2008.
To the extent an issuer has already
provided the disclosure notice in
paragraph (d)(2) of this section to
covered individuals, it need not provide
another such notice by December 19,
2008.
(4) Exception. The requirements of
this paragraph (d) do not apply with
respect to coverage regulated under a
state law described in paragraph (e) of
this section.
PO 00000
Frm 00021
Fmt 4701
Sfmt 4700
62429
(e) Applicability in certain states—(1)
Health insurance coverage. The
requirements of section 2751 of the PHS
Act and this section do not apply with
respect to health insurance coverage in
the individual market if there is a state
law regulating the coverage that meets
any of the following criteria:
(i) The state law requires the coverage
to provide for at least a 48-hour hospital
length of stay following a vaginal
delivery and at least a 96-hour hospital
length of stay following a delivery by
cesarean section.
(ii) The state law requires the
coverage to provide for maternity and
pediatric care in accordance with
guidelines that relate to care following
childbirth established by the American
College of Obstetricians and
Gynecologists, the American Academy
of Pediatrics, or any other established
professional medical association.
(iii) The state law requires, in
connection with the coverage for
maternity care, that the hospital length
of stay for such care is left to the
decision of (or is required to be made
by) the attending provider in
consultation with the mother. State laws
that require the decision to be made by
the attending provider with the consent
of the mother satisfy the criterion of this
paragraph (e)(1)(iii).
(2) Relation to section 2762(a) of the
PHS Act. The preemption provisions
contained in section 2762(a) of the PHS
Act and § 148.210(b) do not supersede a
state law described in paragraph (e)(1)
of this section.
(f) Applicability date. Section 2751 of
the PHS Act applies to health insurance
coverage offered, sold, issued, renewed,
in effect, or operated in the individual
market on or after January 1, 1998. This
section applies to health insurance
coverage offered, sold, issued, renewed,
in effect, or operated in the individual
market on or after January 1, 2009.
Dated: May 11, 2007.
Leslie V. Norwalk,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Dated: October 30, 2007.
Michael O. Leavitt,
Secretary, Department of Health and Human
Services.
Editorial Note: This document was
received in the Office of the Federal Register
on October 14, 2008.
[FR Doc. E8–24666 Filed 10–17–08; 8:45 am]
BILLING CODE 4830–01–4510–29–4120–01–P
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]]>Agencies
[Federal Register Volume 73, Number 203 (Monday, October 20, 2008)]
[Rules and Regulations]
[Pages 62410-62429]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-24666]
[[Page 62409]]
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Part III
Department of the Treasury
Internal Revenue Service
26 CFR Part 54
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Department of Labor
Employee Benefits Security Administration
29 CFR Part 2590
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Department of Health and Human Services
Centers for Medicare & Medicaid Services
45 CFR Parts 144, 146, and 148
-----------------------------------------------------------------------
Final Rules for Group Health Plans and Health Insurance Issuers Under
the Newborn and Mothers, Health Protection Act; Final Rule
Federal Register / Vol. 73, No. 203 / Monday, October 20, 2008 /
Rules and Regulations
[[Page 62410]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9427]
RIN 1545-BG82
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AA63
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
45 CFR Parts 144, 146, and 148
RIN 0938-AI17
Final Rules for Group Health Plans and Health Insurance Issuers
Under the Newborns' and Mothers' Health Protection Act
AGENCIES: Internal Revenue Service, Department of the Treasury;
Employee Benefits Security Administration, Department of Labor; Centers
for Medicare & Medicaid Services, Department of Health and Human
Services.
ACTION: Final rules.
-----------------------------------------------------------------------
SUMMARY: This document contains final rules for group health plans and
health insurance issuers concerning hospital lengths of stay for
mothers and newborns following childbirth, pursuant to the Newborns'
and Mothers' Health Protection Act of 1996 and the Taxpayer Relief Act
of 1997.
DATES: Effective Date: These final regulations are effective December
19, 2008.
Applicability Dates: Group market rules. These final regulations
for the group market apply to group health plans and group health
insurance issuers for plan years beginning on or after January 1, 2009.
Individual market rules. These final regulations for the individual
market apply with respect to health insurance coverage offered, sold,
issued, renewed, in effect, or operated in the individual market on or
after January 1, 2009.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Russ Weinheimer, Internal Revenue Service, Department of the
Treasury, at (202) 622-6080; or Adam Shaw, Centers for Medicare &
Medicaid Services, Department of Health and Human Services, at (877)
267-2323 extension 61091.
Customer service information: Individuals interested in obtaining
copies of Department of Labor publications concerning health care laws
may request copies by calling the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or may request a copy of CMS's publication entitled
``Protecting Your Health Insurance Coverage'' by calling 1-800-633-
4227. These regulations as well as other information on the Newborns'
and Mothers' Health Protection Act and other health care laws are also
available on the Department of Labor's Web site (https://www.dol.gov/
ebsa), including the interactive web pages, Health Elaws.
SUPPLEMENTARY INFORMATION:
I. Background
The Newborns' and Mothers' Health Protection Act of 1996 (Newborns'
Act), Public Law 104-204, was enacted on September 26, 1996. The rules
contained in this document implement changes made to the Employee
Retirement Income Security Act of 1974 (ERISA) and the Public Health
Service Act (PHS Act) made by the Newborns' Act, and parallel changes
to the Internal Revenue Code of 1986 (Code) enacted as part of the
Taxpayer Relief Act of 1997 (TRA '97). The Newborns' Act was enacted to
provide protections for mothers and their newborn children with regard
to hospital lengths of stay following childbirth. Interim final rules
implementing the group and individual market provisions of the
Newborns' Act were published in the Federal Register on October 27,
1998 (63 FR 57546) (the interim final rules).
These regulations being published today in the Federal Register
finalize the interim final rules. The final regulations implementing
the group market provisions of the Newborns' Act are issued jointly by
the Secretaries of the Treasury, Labor, and HHS.\1\ The individual
market final regulations are issued solely by HHS.\2\
---------------------------------------------------------------------------
\1\ 26 CFR 54.9811-1, 29 CFR 2590.711, 45 CFR 146.130.
\2\ 45 CFR 148.170.
---------------------------------------------------------------------------
II. Overview of the Regulations
Section 9811 of the Code, section 711 of ERISA, and sections 2704
and 2751 of the PHS Act (the Newborns' Act provisions) provide a
general rule under which a group health plan and a health insurance
issuer may not restrict mothers' and newborns' benefits for a hospital
length of stay in connection with childbirth to less than 48 hours
following a vaginal delivery or 96 hours following a delivery by
cesarean section. The interim final rule--
Provided that the attending provider makes the
determination that an admission is in connection with childbirth;
Determined when the hospital stay begins for purposes of
application of the general rule;
Provided an exception to the 48-hour (or 96-hour) general
rule if the attending provider decides, in consultation with the
mother, to discharge the mother or her newborn earlier;
Clarified the application of authorization and
precertification requirements with respect to the 48-hour (or 96-hour)
stay;
Explained the application of benefit restrictions and
cost-sharing rules with respect to the 48-hour (or 96-hour) stay;
Clarified the prohibitions with respect to a plan or
issuer offering mothers incentives or disincentives to encourage less
than the 48-hour (or 96-hour) stay;
Clarified the prohibitions against incentives and
penalties with respect to attending providers; and
Included the statutory notice provisions under ERISA and
the PHS Act. In general, these final regulations do not change the
interim final rules. However, the text of these final regulations
incorporates a clarifying statement from the preamble of the interim
final rules that the definition of attending provider does not include
a plan, hospital, managed care organization, or other issuer. The text
also makes a small clarification with respect to state law
applicability.
In addition, these final regulations make minor clarifications to
the notice requirements for nonfederal governmental plans. The interim
final rules specified that the notice of post-childbirth
hospitalization benefits must be included in the plan document that
described plan benefits to participants and beneficiaries. These final
regulations specify that any notice a nonfederal governmental plan must
provide under these regulations can be included either in the plan
document that describes benefits, or in the type of document the plan
generally uses to inform participants and beneficiaries of plan benefit
changes. These final regulations also specify that any time a plan
distributes one or both of these documents after providing the initial
notice, the applicable statement must
[[Page 62411]]
appear in one or both of these documents.
Hospital Length of Stay
The interim final rules and these final regulations provide that
when a delivery occurs in the hospital, the stay begins at the time of
delivery (or, in the case of multiple births, at the time of the last
delivery) rather than at the time of admission or onset of labor. Also,
the interim final rules and these final regulations provide that when a
delivery occurs outside of the hospital, the stay begins at the time
the mother or newborn is admitted (rather than at the time of
delivery).
Some comments expressed concern that this rule somehow required
birthing centers or other non-hospital facilities to extend the right
to stay to more than 24 hours. These comments noted that such extended
stays may violate local regulations or otherwise conflict with the
operations of such facilities. The statute and these final regulations
do not require hospitals or other facilities to provide particular
lengths of stay, but instead require group health plans and health
insurance issuers to provide benefits for particular hospital lengths
of stay.
A comment recommended that if a delivery was planned for outside of
a hospital, any following admission in response to complications
resulting from that delivery should be excluded from the provisions
providing for particular lengths of stay. These final regulations do
not distinguish between a delivery that was planned for outside of the
hospital and other deliveries occurring outside of a hospital.
Definition of Attending Provider
The mandatory coverage period provisions are not violated if the
attending provider, in consultation with the mother, decides to
discharge the mother or newborn earlier. Under the interim final rules
and these final regulations, the attending provider is defined by a
functional analysis of state licensure rules and the actual performance
of care. Under this definition, the attending provider is restricted to
an individual who is licensed under applicable state law to provide
maternal or pediatric care and who is directly responsible for
providing such care to a mother or newborn child. While the preamble to
the interim final rules noted that this definition could include a
nurse midwife or physician assistant, the regulation itself does not
provide a list of titles or positions that qualify as attending
providers.
Some comments requested that additional titles, such as pediatric
nurse practitioners, or nurse practitioners, be specifically mentioned
in the definition. While positions with these titles may meet the
definition in many cases, as noted above, the language of the
regulation takes a functional approach and does not provide a list of
titles or positions that qualify as attending providers. This
functional approach is more useful in addressing who the attending
provider is on an ongoing basis, as specific position titles and
responsibilities may vary from location to location as well as over
time.
It was also suggested that the text of the final regulations
incorporate a clarifying statement from the preamble of the interim
final rules that the definition of attending provider does not include
a plan, hospital, managed care organization, or other issuer. These
final regulations adopt this suggestion.
Compensation of Attending Provider
Several comments addressed the provisions in the interim final
rules that relate to the compensation of physicians and other attending
providers. These provisions prohibit plans and issuers from penalizing
attending providers who provide care in accordance with the
regulations, and prohibit plans and issuers from inducing attending
providers to provide care in a manner that is inconsistent with the
regulations. At the same time, the statute specifies that plans and
issuers are still free to negotiate with attending providers the level
and type of compensation for care furnished in accordance with the
regulations.
The comments requested greater specificity in the final regulations
for distinguishing between the types of compensation arrangements that
are permissible under the negotiation provision and those that are
impermissible under the prohibitions against penalties and inducements.
One comment suggested that it is clear that a bonus arrangement for
obstetricians and gynecologists contingent on the percentage of
discharges within 24 hours would not be permitted. The comment
requested confirmation that arrangements with a more general focus
would be permitted, such as a global payment for prenatal care and
childbirth, or a bonus for a multi-specialty group including
obstetricians and gynecologists based on the utilization for all
patients served by the group. Another comment expressed a concern about
whether capitated arrangements are consistent with the hospital length-
of-stay requirements.
The Departments devoted considerable resources over a sustained
period of time to develop rules that provide greater specificity for
distinguishing between negotiated compensation arrangements that would
give attending providers an incentive to deliver health care services
efficiently and arrangements that could give providers an incentive to
discharge patients in contravention of the statute and regulations. The
great variety, complexity, and mutability of such arrangements \3\
would have required extensive rules that at best were likely to impose
heavy administrative costs and yet were still of only marginal value in
clarifying what arrangements would be permissible. For this reason, the
rules on compensation arrangements for attending providers are adopted
unchanged from the interim final rules.
---------------------------------------------------------------------------
\3\ Broad classes of examples include fee-for-service,
capitation, productivity-based salary, incentive contracting,
blended systems, prospective versus post-service payment, etc. See
e.g., Theory and Practice in the Design of Physician Payment
Incentives, James C. Robinson (University of California, Berkley),
The Milbank Quarterly, Vol. 79, No. 2, 2001; Regulation of Managed
Care Incentive Payments to Physicians, Stephen Latham (Boston
University School of Law), 22 Am. J.L. & Med. 399; Blended Payment
Methods in Physician Organizations Under Managed Care, James C.
Robinson, JAMA 1999;282:1258-1263; The Alignment and Blending of
Payment Incentives Within Physician Organizations, JC Robinson, SM
Shortell, R Li, LP Casalino, T Rundall, Health Services Research Vol
39, Issue 5, pages 1589-1606, Oct. 2004.
---------------------------------------------------------------------------
The final regulations do not attempt to provide guidance on this
issue through examples. Certainly the bonus arrangement described in
one comment, based on the percentage of discharges within 24 hours,
violates the prohibition against providing inducements for early
discharge. Such an example is not included in the final regulations to
avoid the inference that anything less blatant would be permissible.
Examples of less blatant arrangements could be similarly misleading,
whether the conclusion was that the arrangement was permissible or
impermissible, since there are bound to be differences between
arrangements that would have been described in the regulations and any
actual arrangement for an attending provider, and in some cases even
minor differences could change the result.
Authorization and Precertification
The interim final rules and these final regulations provide, under
paragraph (a), that a group health plan or a health insurance issuer
may not require a physician or other health care provider to obtain
authorization from the plan or issuer to prescribe a hospital length of
stay that is subject to the general rule.
[[Page 62412]]
Under paragraph (b) of the interim final rules and these final
regulations, a plan or issuer may not restrict benefits for part of a
stay that is subject to the general rule in a way that is less
favorable than a prior portion of the stay. An example in the interim
final rules and these final regulations illustrates that a plan or
issuer is precluded from requiring a covered individual to obtain
precertification for any portion of a hospital stay that is subject to
the general rule if precertification is not required for any preceding
portion of the stay. However, the interim final rules do not prevent a
plan or issuer from requiring precertification for any portion of a
stay after 48 hours (or 96 hours), or from requiring precertification
for an entire stay.
Under paragraph (c) of the interim final rules and these final
regulations, a plan or issuer may not increase an individual's
coinsurance for any later portion of a 48-hour (or 96-hour) hospital
stay. An example in the interim final rules and these final regulations
illustrates that plans and issuers may vary cost-sharing in certain
circumstances, provided the cost-sharing rate is consistent throughout
the 48-hour (or 96-hour) hospital length of stay.
One comment asked whether less favorable cost sharing for the 48-
hour (or 96-hour) stay can be applied to covered individuals who fail
to give advance notice or notice upon admission for the services or
providers related to the stay, if such a penalty applies in other
hospitalization situations. This issue was addressed in Example 2 of
paragraph (c)(3) of the interim final rules. This example is repeated
in the final regulations and illustrates that a plan may require
advance notice for services or providers related to hospital length of
stay in connection with childbirth, in order for a covered individual
to obtain more favorable cost sharing under the plan or coverage. Such
requirements may not be used to deny an individual benefits for any
portion of the 48-hour (or 96-hour) stay based on a determination of
medical necessity or appropriateness. Any variance in cost-sharing
related to compliance with a plan's or an issuer's advance notice
requirements must be applied consistently throughout the 48-hour (or
96-hour) stay. Under the principles set forth in the rule and
illustrated in this example, a plan or issuer could generally apply
less favorable cost sharing towards the hospital length of stay in
connection with childbirth of an individual who failed to satisfy the
plan's advance notice requirements, to the extent permissible under the
preexisting condition rules in 26 CFR 54.9801-3, 29 CFR 2590.701-3, and
45 CFR 146.111 and 148.120.\4\
---------------------------------------------------------------------------
\4\ In order to avoid imposing an impermissible preexisting
condition exclusion, plans and group health insurance issuers that
require individuals to notify the plan or issuer of pregnancy within
a certain amount of time (for example, within the first trimester)
must waive or modify the notice requirement for individuals who
enroll in the plan after the time notice was required. This also
applies to individual market issuers with respect to federally
eligible individuals they are required to enroll.
---------------------------------------------------------------------------
Notice Requirements under ERISA and the PHS Act
This section of the final regulations addresses the Newborns' Act
notice requirements under ERISA and the PHS Act. The interim final
rules, and these final regulations, contain different notice provisions
for ERISA-covered group health plans, nonfederal governmental plans,
and health insurance issuers in the individual market. ERISA-covered
group health plans are required to comply with the ERISA notice
regulations, whether insured or self-insured. Nonfederal governmental
plans and health insurance issuers in the individual market are
required to comply with the PHS Act notice regulations. Because there
are fundamental differences between the types of entities regulated
under ERISA as compared to the PHS Act, and in the structure of the two
acts, the notice requirements in the ERISA regulations and PHS Act
regulations differ.
Notice Requirements under ERISA. The interim final rules and these
final regulations require group health plans that are subject to ERISA
to comply with summary plan description (SPD) disclosure requirements
at 29 CFR 2520.102-3(u). The SPD rules generally require that
participants and beneficiaries in a group health plan be furnished an
SPD to apprise them of their rights and obligations. The rules also
prescribe the content of the SPD and the manner and timing in which
participants and beneficiaries are to be notified of any material
modification to the terms of the plan or any change in the information
required to be included in the SPD.
In November 2000, the Department of Labor finalized the SPD content
regulation (65 FR 70241) requiring that all group health plans
(including insured plans not subject to the federal Newborns' Act)
provide language in the SPD that describes the federal or state law
requirements applicable to the plan or any health insurance coverage
offered under the plan relating to hospital lengths of stay in
connection with childbirth for the mother or newborn child. If federal
law applies in some areas in which the plan operates and state law
applies in other areas, the SPD should describe the different areas and
the federal or state law requirements applicable in each. Model
language for plans subject to the federal Newborns' Act's requirements
is included in the SPD content regulation. This change became
applicable as of the first day of the second plan year beginning on or
after January 22, 2001.
Some comments asked for clarification about whether the notice can
be provided through electronic media, as an alternative to traditional
paper disclosure. Under ERISA, the notice can be provided through
electronic media if the plan complies with ERISA's electronic
disclosure rules in 29 CFR 2520.104b-1.
Some comments requested that the rules require plans to provide
information to patients and providers regarding who has legal oversight
with respect to the Newborns' Act and who to contact in the event of a
violation. However, this concern is already addressed by current
regulation. Under 29 CFR 2520.102-3(t)(1) of the SPD content rules,
ERISA plans are required to provide a statement of ERISA rights in the
SPD. Among other things, this provision requires ERISA-covered plans to
provide information on the enforcement of a participant or
beneficiary's rights and who to contact if there are any questions
about the plan.
Notice Requirements under the PHS Act. Nonfederal governmental
plans. The Newborns' Act requires nonfederal governmental plans to
comply with the Newborns' Act notice requirements under section 711(d)
of ERISA as if section 711(d) applied to such plans.
The interim final rules and these final regulations require plans
that are subject to the federal Newborns' Act requirements to provide a
notice with specific language describing the federal requirements.
Under the interim final rules and these final regulations, if federal
law applies in some areas in which the plan operates and state law
applies in others, the plan must provide the appropriate notice to each
participant and beneficiary who is covered by federal law.
Several comments on the interim final rules objected that specific
language was required for the disclosure statement, and suggested that
the regulation instead should have provided guidelines for plans to
base their own language on (such as language that
[[Page 62413]]
comports with the Department of Labor's sample language). However,
requiring specific language ensures the substantive adequacy of the
notices. Additionally, because many plans presumably have already
incorporated that mandatory language into their documents since the
effective date of the interim final rules, continuing to require that
language is the simplest approach.
As in the interim final rules, these final regulations require
nonfederal governmental plans to provide notice not later than 60 days
after the first day of the plan year following the effective date,
regardless of whether the plan had already provided notice under the
Department of Labor standards. This takes into account the fundamental
differences between the nonfederal governmental plans regulated under
the PHS Act and the types of entities regulated under ERISA. However,
with respect to the requirement that notice be provided within that 60-
day period, the final regulations include an exception for plans with
regard to participants and beneficiaries for whom the plan has already
provided notices in accordance with the interim final regulations that
are consistent with these final regulations (such as self-insured
nonfederal governmental plans that are subject to the federal Newborns'
Act requirements and that have already provided such notices).
Health insurance issuers in the individual market. The Newborns'
Act requires health insurance issuers in the individual market to
comply with the Newborns' Act notice requirements under section 711(d)
of ERISA as if section 711(d) applied to such issuers. Thus, the
interim final rules and these final regulations require individual
market health insurance issuers that provide benefits for hospital
lengths of stay in connection with childbirth to include, in the
insurance contract, a rider, or equivalent amendment to the contract,
specific language that notifies policyholders of their rights under the
Newborns' Act. The interim final rules and these final regulations also
require such issuers to provide this notice not later than a specific
time frame that is within a few months after the effective date of the
regulations.
Several comments on the interim final rules objected that specific
language was required for the disclosure statement and suggested
instead there should be guidelines for issuers to base their own
language on. However, requiring specific language ensures the
substantive adequacy of the notices. Additionally, because issuers
presumably have already incorporated that language into their documents
since the effective date of the interim final rules, continuing to
require that same language is the simplest approach.
These final regulations retain the notice exception in the interim
final rules for issuers that are subject only to state insurance law
requirements regarding hospital lengths of stay following childbirth.
Applicability in States
The statute and the interim final rules include an exception to the
Newborns' Act requirements for health insurance coverage in certain
states. Specifically, the Newborns' Act and the interim final rules do
not apply with respect to health insurance coverage if there is a state
law that meets any of the criteria \5\ that follow:
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\5\ HHS has the responsibility to enforce the federal Newborns'
Act with regard to issuers in states that do not have one of the
three types of state laws described in the Newborns' Act. As of the
publication of these final regulations, the only state in which HHS
is enforcing the Newborns' Act with respect to issuers is Wisconsin.
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The state law requires health insurance coverage to
provide at least a 48-hour (or 96-hour) hospital length of stay in
connection with childbirth;
The state law requires health insurance coverage to
provide for maternity and pediatric care in accordance with guidelines
established by the American College of Obstetricians and Gynecologists,
the American Academy of Pediatrics, or any other established
professional medical association; or
The state law requires that decisions regarding the
appropriate hospital length of stay in connection with childbirth be
left to the attending provider in consultation with the mother. The
interim final rules and these final regulations clarify that state laws
that require the decision to be made by the attending provider with the
consent of the mother satisfy this criterion.
Although this exception applies with respect to insured group
health plans, it does not apply with respect to a group health plan to
the extent the plan provides benefits for hospital lengths of stay in
connection with childbirth other than through health insurance
coverage. Accordingly, self-insured plans in all states generally are
required to comply with the federal requirements (except those
nonfederal governmental plans that have opted out of the PHS Act
requirements).
These final regulations repeat the statute and the interim final
rules with one clarification. With respect to the second criterion
above (professional guidelines), the statute only addresses the period
following a vaginal delivery or a caesarean section. Accordingly,
although guidelines issued by professional medical associations such as
the American College of Obstetricians and Gynecologists (ACOG) cover a
spectrum of care both before and after childbirth, the only relevant
guidelines for this purpose are those pertaining to care following
childbirth. Therefore, the final rules include an express clarification
that State law need only require coverage in accordance with
professional guidelines that deal with care following childbirth.
Guidelines relating to other issues are not relevant for this purpose.
One comment to the interim final rules supported the criteria used
in those rules for determining whether the federal Newborns' Act
applies in a given state. However, another comment objected to the fact
that issuers in states that have enacted one of the three types of
state laws described in the federal Newborns' Act would arguably be
exempt from several of the federal Act's requirements, such as the
prohibitions on offering incentives to providers to induce them to
provide care in a manner inconsistent with the Act. This comment asked
us to reconsider whether the regulations should provide such a broad
exception from the federal Act's requirements in such states. The
statutory language does not require state law to include all the
federal provisions, such as the anti-incentive provisions, in order for
health insurance coverage in that state to be excepted from the federal
requirements. In light of this flexibility, these final regulations
retain the exception from the interim final rules.
Applicability Date
These final rules apply to group health plans, and health insurance
issuers offering group health insurance coverage, for plan years
beginning on or after January 1, 2009. The final rules for the
individual market apply with respect to health insurance coverage
offered, sold, issued, renewed, in effect, or operated in the
individual market on or after January 1, 2009. Until the applicability
date for this regulation, plans and issuers are required to continue to
comply with the corresponding sections of the regulations previously
published in the Federal Register (63 FR 57546) and other applicable
regulations.
[[Page 62414]]
III. Economic Impact and Paperwork Burden
Summary--Department of Labor and Department of Health and Human
Services
The Newborns' Act provisions generally prohibit group health plans
and group health insurance issuers from limiting hospital lengths of
stay in connection with childbirth to less than 48 hours for vaginal
deliveries and 96 hours for cesarean sections and from requiring a
health care practitioner to obtain preauthorization for such stays. For
insured coverage, the Newborns' Act allows any state law, meeting one
of three criteria, to take its place. The Departments have crafted
these regulations to secure the Act's protections in as economically
efficient a manner as possible, and believe that the economic benefits
of the regulations justify their costs.\6\
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\6\ The Newborns' Act still requires that insured plans disclose
a notice outlining participants' rights regarding hospital lengths
of stay related to childbirth. Nonetheless, final regulations
related to that notice were published separately (see 65 FR 70266,
Nov. 21, 2000) and so those costs are not included herein.
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The primary economic benefits associated with securing these
minimum lengths of stay derive from the reduction in complications
linked to premature discharge of mothers and newborns. Complications
that are easily treated and readily identifiable, like excessive
bleeding and infection in new mothers and dehydration and
hyperbilirubinemia in their newborns, are common causes for readmission
following a premature discharge. These complications and the subsequent
readmissions are expensive and cause avoidable suffering for mothers
and their newborns.
By eliminating the need to obtain preauthorization for affected
stays, the Act provides affected individuals with increased access to
the health care system. Increased access fosters timelier and fuller
medical care, better health outcomes, and improved quality of life.
This is especially true for certain individuals affected by the
Newborns' Act provisions. For example, lower-income individuals, when
denied coverage for the full length of stay, are more likely to forego
care for financial reasons. When adverse health outcomes result, costs
for the individual and the plan are high. For these individuals
especially, this requirement is more likely to mean receiving timely,
quality postnatal care, and living healthier lives.
Any mandate to increase the richness of health benefits, however,
adds to the cost of health coverage. Plans can mitigate costs by
increasing cost-sharing or by reducing non-mandated benefits. This in
turn shifts the economic burden of the regulation to plan participants,
and may induce some employers and employees, as well as those in the
individual insurance market, to drop coverage. The cost of enacting
federal minimum stay regulation is estimated to fall between $139 and
$279 million annually.\7\ However, as this constitutes a small fraction
of one percent of total health care expenditures, it would most likely
be a small, possibly negligible, factor in most employers' decisions to
offer health coverage and individuals' decisions to enroll.
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\7\ The vast majority of this cost is attributable to the impact
of the statute. ($14 million is the upper bound cost attributable to
the exercise of regulatory discretion.) Moreover, there are no
increased costs attributable to any new exercise of regulatory
discretion in the final rule. Instead, the final rule repeats the
interpretations of the interim final rule. Any increased costs over
the 1998 estimate in the interim final rules are attributable to
economic factors, such as increased cost of care (from 1996 to 2007
dollars), increased number of births, and increased number of
participants and beneficiaries covered by self-insured plans to
which the regulations apply.
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While the interim final regulations clarified several provisions
within the statute, this action serves primarily to provide the
certainty associated with a final rule for the regulated community, as
well as update the cost of the regulation, adjusting for changes in the
landscape of the community. Because these regulations are being
published several years after the Newborns' Act's passage and minimal
interpretation of the statutory language was required, the regulatory
implementation costs should be negligible. Costs of the final
regulation are detailed below in the section entitled ``Unified
Analysis of Costs and Benefits.'' Benefits of the regulation are also
discussed in that section at length, although because the benefits
primarily involve quality of life improvements, the Departments have
not attempted to quantify them. They do, however, believe them to be
sufficiently large so as to justify the cost of the regulation.
Executive Order 12866--Department of Labor and Department of Health and
Human Services
Under Executive Order 12866, the Departments must determine whether
a regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule (1) having an annual effect on the economy of $100 million or
more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined that this action is ``economically significant'' and is
subject to OMB review under Section 3(f) of the Executive Order.
Consistent with the Executive Order, the Departments have assessed the
costs and benefits of this action. The Departments' assessment, and the
analysis underlying the assessment, is detailed below. The Departments
performed a comprehensive, unified analysis to estimate the costs and
benefits attributable to the regulations for purposes of compliance
with Executive Order 12866, the Regulatory Flexibility Act, and the
Paperwork Reduction Act.
These final regulations are needed to provide certainty for the
affected community, as well as clarify the economic burden that the
Newborns' Act will place on health plans and their participants. The
Departments believe that this regulation's benefits will justify its
costs. This belief is grounded in the assessment of costs and benefits
that is summarized earlier and detailed below.
Regulatory Flexibility Act--Department of Labor and Department of
Health and Human Services
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and likely to have
a significant economic impact on a substantial number of small
entities. Unless an agency certifies that a final rule will not have a
significant economic impact on a substantial number of small entities,
section 604 of the RFA requires that the agency present a final
regulatory flexibility analysis (FRFA) at the time of the publication
of the notice of final rulemaking describing
[[Page 62415]]
the impact of the rule on small entities. Small entities include small
businesses, organizations, and governmental jurisdictions.
Because the 1998 rules were issued as interim final rules and not
as a notice of proposed rulemaking, the RFA did not apply and the
Departments were not required to either certify that the rule would not
have a significant impact on a substantial number of small entities or
conduct a regulatory flexibility analysis. The Departments nonetheless
crafted those regulations in careful consideration of effects on small
entities, and conducted an analysis of the likely impact of the rules
on small entities. This analysis was detailed in the preamble to the
interim final rule.
For purposes of this discussion, the Departments consider a small
entity to be an employee benefit plan with fewer than 100 participants.
Pursuant to the authority of section 104(a)(3) of ERISA, the Department
of Labor has previously issued at 29 CFR 2520.104-20, 2520.104-21,
2520.104-41, 2520.104-46 and 2520.104b-10, certain simplified reporting
provisions and limited exemptions from reporting and disclosure
requirements for small plans, including unfunded or insured welfare
plans covering fewer than 100 participants and which satisfy certain
other requirements.
Further, while some small plans are maintained by large employers,
most are maintained by small employers. Both small and large plans may
enlist small third party service providers to perform administrative
functions, but it is generally understood that third party service
providers shift their costs to their plan clients in the form of fees.
Thus, the Departments believe that assessing the impact of this final
rule on small plans is an appropriate substitute for evaluating the
effect on small entities. The definition of small entity considered
appropriate for this purpose differs, however, from a definition of
small business based on size standards promulgated by the Small
Business Administration (SBA) (13 CFR 121.201) pursuant to the Small
Business Act (5 U.S.C. 631 et seq.). The Department of Labor solicited
comments on the use of this standard for evaluating the impact of the
proposed regulations on small entities. No comments were received with
respect to this standard.
The Departments believe that the final regulation will not have a
significant economic impact on a substantial number of small entities.
The direct costs of restricting short stay policies is estimated to
fall between $15 million and $31 million for small plans which amount
to a per-participant cost of between nine and nineteen dollars for
those plans affected, or a small fraction of one percent of total small
plan expenditures.\8\
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\8\ Departments' estimates using the 2005 Medical Expenditures
Panel Survey Household Component (MEPS-HC), the 2006 Medical
Expenditures Panel Survey Insurance Component (MEPS-IC) and the
National Centers for Disease Control and Prevention (CDC) National
Hospital Discharge Survey: 2005 Annual Summary with Detailed
Diagnosis and Procedure Data determined that of participants
affected by the regulation, 11 percent were enrolled in small plans.
Costs born by small plans were 11 percent of all costs.
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The Departments estimate that prior to the Act, 115,000 small plans
with 1.6 million participants would have restricted lengths of stay in
connection with childbirth or required preauthorization for such
stays.\9\ While this represents just 5 percent of all small plans, the
Departments believe it may represent a substantial number of small
entities.
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\9\ Estimates are based on the 2006 MEPS-IC. It should be noted,
however, that the Pregnancy Discrimination Act of 1978 allows firms
with less than 15 employees that offer health insurance to exclude
maternity care. The 2000 Mercer/Foster Higgins National Survey of
Employer Sponsored Health Plans found that 7 percent of firms with
10-24 employees did not offer such benefits, but the survey did not
examine smaller firms. Rough estimates by the Departments suggest
that the share of firms with 9 or fewer employees that offer health
benefits but exclude maternity benefits is 21 percent. As the cost
of these benefits rises, this share is likely to increase which,
while having a small effect on the number of participants affected
by the regulation, might significantly decrease the number of small
plans affected by the regulation.
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Paperwork Reduction Act--Department of Labor and Department of Health
and Human Services
1. Department of Labor
These rules contain no new information collection requirements that
are subject to review and approval by OMB under the Paperwork Reduction
Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). The Department of
Labor reported the information collection burdens associated with the
Newborns' Act in the interim rules (Interim Rules Amending ERISA
Disclosure Requirements for Group Health Plans) implementing section
711(d) of ERISA that were published in the Federal Register on April 8,
1997 (62 FR 16979). OMB approved the information collection under OMB
Control Number 1210-0039, expiring on March 31, 2010.
2. Department of Health and Human Services
These rules contain no new information collection requirements that
are subject to review and approval by OMB under the Paperwork Reduction
Act of 1995 (Pub. L. 104-13, 44 U.S.C. Chapter 35). HHS reported the
information collection burdens associated with the Newborns' Act in the
interim rules (Information Collection Requirements Referenced in HIPAA
for the Group Market, Supporting Regulations 45 CFR 146), published in
the Federal Register on April 8, 1997. These collection requirements
were approved under OMB Control Number 0938-0702, expiring on August
31, 2009.
Special Analyses--Department of the Treasury
Notwithstanding the determinations of the Departments of Labor and
of Health and Human Services, for purposes of the Department of the
Treasury it has been determined that this Treasury decision is not a
significant regulatory action. Therefore, a regulatory assessment is
not required. It has also been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these Treasury regulations, and, because these regulations do not
impose a collection of information on small entities, a Regulatory
Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C.
chapter 6) is not required. Pursuant to section 7805(f) of the Code,
the notice of proposed rulemaking preceding these regulations was
submitted to the Small Business Administration for comment on its
impact on small business.
Congressional Review Act
These regulations are subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.) and have been transmitted to Congress and
the Comptroller General for review. These regulations, however, are
considered a ``major rule,'' as that term is defined in 5 U.S.C. 804,
because they are likely to result in an annual effect on the economy of
$100 million or more.
Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4), as well as Executive Order 12875, these regulations do not
include any federal mandate that may result in expenditures by state,
local, or tribal governments,\10\ however, they include mandates which
may impose an annual burden of $100 million or more on the private
sector, updated annually for inflation. After applying the most
[[Page 62416]]
current gross domestic product implicit price deflator in 2008, that
threshold is approximately $130 million.
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\10\ Nonfederal governmental plans can opt-out of these
requirements and it was assumed that those States that had rules in
place that supplanted the Newborns' Act (that is, all States except
one) would.
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Federalism Statement Under Executive Order 13132--Department of Labor
and Department of Health and Human Services
Executive Order 13132 outlines fundamental principles of
federalism. It requires adherence to specific criteria by federal
agencies in formulating and implementing policies that have
``substantial direct effects'' on the States, the relationship between
the national government and States, or on the distribution of power and
responsibilities among the various levels of government. Federal
agencies promulgating regulations that have these federalism
implications must consult with State and local officials, and describe
the extent of their consultation and the nature of the concerns of
State and local officials in the preamble to the regulation.
In the Departments' view, these final regulations have federalism
implications because they may have substantial direct effects on the
States, the relationship between the national government and States, or
on the distribution of power and responsibilities among the various
levels of government. However, in the Departments' view, the federalism
implications of these final regulations are substantially mitigated
because, with respect to health insurance issuers, all but one of the
States have requirements that prescribe benefits for hospital lengths
of stay in connection with childbirth that satisfy the Newborns' Act
hospital length of stay requirements.
In general, through section 514, ERISA supersedes State laws to the
extent that they relate to any covered employee benefit plan, but
preserves State laws that regulate insurance. At the same time,
however, ERISA prohibits States from regulating a plan as an insurance
company. HIPAA added a new section to ERISA (as well as to the PHS Act
and the Code) narrowly preempting State requirements for issuers of
group health insurance coverage.\11\ HIPAA's conference report states
that the conferees intended only the narrowest preemption of State laws
with regard to health insurance issuers. H.R. Conf. Rep. No. 736, 104th
Cong. 2d Session 205 (1996).
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\11\ The Newborns' Act was incorporated into the administrative
framework established by HIPAA.
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The Newborns' Act also added a new section to ERISA (and to the PHS
Act and the Code) which provides that the federal requirements
applicable to group health plans and health insurance issuers
concerning hospital lengths of stay for mothers and newborns following
childbirth do not apply if State law meets one or more of three
specific criteria in the statute.\12\ The accompanying conference
report states that it is the intent of the conferees that States may
impose more favorable requirements for the treatment of maternity
coverage under health insurance coverage than required by the Newborns'
Act. H.R. Conf. Rep. No. 104-812, 104th Cong. 2d Session 88 (1996).
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\12\ The federal requirements concerning hospital lengths of
stay in connection with childbirth do not apply with respect to
health insurance coverage if state law requires (1) such coverage to
provide for at least a 48-hour hospital length of stay following a
vaginal delivery and at least a 96-hour length of stay following a
delivery by cesarean section, (2) such coverage to provide for
maternity and pediatric care in accordance with guidelines
established by the American College of Obstetricians and
Gynecologists, the American Academy of Pediatrics, or other
established professional medical associations, or (3) in connection
with such coverage for maternity care, that the hospital length of
stay for such care is left to the decision of (or is required to be
made by) the attending provider in consultation with the mother.
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Guidance conveying the Newborns' Act hospital length of stay
requirements was published in the Federal Register on October 27, 1998
(63 FR 57546). These final regulations clarify and implement the
statute's minimum standards and do not significantly reduce the
discretion given the States by the statute. Moreover, the Departments
understand that all but one State have requirements that prescribe
benefits for hospital lengths of stay in connection with childbirth
that satisfy the Newborns' Act requirements.
The Newborns' Act modified HIPAA's framework to provide that the
States have primary responsibility for enforcement of the provisions of
the Newborns' Act as they pertain to issuers, but that the Secretary of
Health and Human Services must enforce any provision that a State fails
to substantially enforce. To date, CMS enforces the Newborns' Act
hospital length of stay requirements in only one State. When exercising
its responsibility to enforce the Newborns' Act provisions, CMS works
cooperatively with the State for the purpose of addressing the State's
concerns and avoiding conflicts with the exercise of State authority.
CMS has developed procedures to implement its enforcement
responsibilities, and to afford the States the maximum opportunity to
enforce the Newborns' Act requirements in the first instance. CMS
procedures address the handling of reports that States may not be
enforcing the Newborns' Act requirements, and the mechanism for
allocating responsibility between the States and CMS. In compliance
with Executive Order 13132's requirement that agencies examine closely
any policies that may have federalism implications or limit the
policymaking discretion of the States, the Department of Labor and CMS
have consulted and worked cooperatively with affected State and local
officials.
For example, the Departments sought and received input from State
insurance regulators and the National Association of Insurance
Commissioners (NAIC). The NAIC is a non-profit corporation established
by the insurance commissioners of the 50 States, the District of
Columbia, and the four U.S. territories. In most States the insurance
commissioner is appointed by the governor; in approximately 14 States,
the insurance commissioner is an elected official. Among other
activities, it provides a forum for the development of uniform policy
when uniformity is appropriate. Its members meet, discuss and offer
solutions to mutual problems. The NAIC sponsors quarterly meetings to
provide a forum for the exchange of ideas and in-depth consideration of
insurance issues by regulators, industry representatives and consumers.
CMS and Department of Labor staff have consistently attended these
quarterly meetings to listen to the views of the State insurance
departments.
In addition, the Departments informally consulted with the NAIC in
developing the interim final regulations. Through the NAIC, the
Departments sought and received the input of State insurance
departments regarding preemption of State laws, applicability of the
Newborns' Act provisions, and certain insurance industry definitions
(e.g., attending provider). In general, these final regulations do not
change the interim final rules. Significantly, the Departments received
only eleven formal comment letters on the interim final regulation,
none of which were from or on behalf of the NAIC or any of the States.
The Departments have also cooperated with the States in several
ongoing outreach initiatives, through which information is shared among
federal regulators, State regulators and the regulated community. In
particular, the Department of Labor has established a Health Benefits
Education Campaign with more than 70 partners, including CMS, NAIC and
many business and consumer groups. CMS has sponsored conferences with
the States--the Consumer Outreach and Advocacy
[[Page 62417]]
conferences in March 1999 and June 2000, and the Implementation and
Enforcement of HIPAA National State-Federal Conferences in August 1999,
2000, 2001, 2002, and 2003. Furthermore, both the Department of Labor
and CMS Web sites offer links to important State Web sites and other
resources, facilitating coordination between the State and federal
regulators and the regulated community.
Throughout the process of developing these regulations, to the
extent feasible within the specific preemption provisions of HIPAA and
the Newborns' Act, the Departments have attempted to balance the
States' interests in regulating health insurance issuers, and Congress'
intent to provide uniform minimum protections to consumers in every
State. By doing so, it is the Departments' view that they have complied
with the requirements of Executive Order 13132.
Pursuant to the requirements set forth in Section 8(a) of Executive
Order 13132, and by the signatures affixed to these final regulations,
the Departments certify that the Employee Benefits Security
Administration and the Centers for Medicare & Medicaid Services have
complied with the requirements of Executive Order 13132 for the
attached Final Regulations for Group Health Plans and Health Insurance
Issuers Under the Newborns' and Mothers' Health Protection Act (RIN
1210-AA63 and RIN 0938-AI17), in a meaningful and timely manner.
Unified Analysis of Costs and Benefits
1. Introduction
The Newborns' Act's provisions generally prohibit group health
plans and health insurance issuers from: (1) Limiting hospital lengths
of stay in connection with childbirth to less than 48 hours for vaginal
deliveries and 96 hours for cesarean sections, and (2) requiring
preauthorization for the 48/96 hour stays. The primary effect and
intent of the provision is to reduce postpartum complications
associated with premature discharge.
These regulations draw on the Departments' authority to clarify and
interpret the Newborns' Act's statutory provisions in order to secure
the protections intended by Congress for newborns and mothers. The
Departments crafted them to satisfy this mandate in as economically
efficient a manner as possible, and believe that the economic benefits
of the regulations justify their costs. This conclusion takes into
account both the effect of the statute and the impact of the discretion
exercised in the regulations.
This regulation is needed to clarify and interpret the Newborns'
Act provisions under section 711 of ERISA, sections 2704 and 2751 of
the PHS Act, and section 9811 of the Internal Revenue Code and to
ensure that group health plans and health insurance issuers subject to
these rules do not impermissibly restrict benefits or require
preauthorization for 48-hour or 96-hour hospital lengths of stay in
connection with childbirth.
2. Costs and Benefits of the Statute
The Departments provide qualitative assessments of the nature of
the costs and benefits that are expected to derive from the statutory
provisions of the Newborns' Act. In addition, the Departments provide
summaries of any credible, empirical estimates of these effects that
are available.
In order to determine how many plan participants could benefit from
the Newborns' Act provision, the Departments considered the estimated
2.8 million births in 2005 by women with private health insurance.\13\
Of these, approximately 55.0 percent are assumed to be normal, healthy
deliveries, and therefore eligible for early discharge.\14\ Because
legislation has been passed in every state but Wisconsin, the
Departments limited their analysis to participants in self-insured
group health plans throughout the country and all health plans within
Wisconsin. Finally, because Health Maintenance Organizations (HMOs)
have traditionally had more aggressive short-stay policies, the share
of workers enrolled in HMOs versus commercial plans was taken into
account as were the share of those plans with short-stay policies.\15\
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\13\ Departments' estimate based on the 2005 MEPS-HC and the
2005 CDC Survey.
\14\ The CDC reported that of the 4.0 million births in 2005,
2.2 million, or 55.0 percent of those newborns were categorized as
without any illness or risk-related diagnosis (e.g. jaundice,
respiratory distress, disorders relating to short gestation and low
birth weight). No data are available on whether health of newborns
varies by mothers' insurance status, although insured mothers are
more likely to receive prenatal care and this would be expected to
positively affect the share of ``healthy'' births (see Susan Egerter
et al., ``Timing of Insurance Coverage and Use of Prenatal Care
Among Low-Income Women,'' American Journal of Public Health, v.
92(3): 423-427).
\15\ Julie A. Gazmararian & Jeffrey Koplan found in, ``Length-
of-Stay After Delivery: Managed Care versus Fee for Service,''
Health Affairs, v. 15(4): 74-80, that 35.9 percent of enrollees in
commercial plans were discharged within one day after delivery
compared to 57.7 percent from commercial HMOs. The shares of
individuals enrolled in HMOs at self-insured and fully-insured plans
were taken from the 2007 Kaiser Family Foundation's Survey of
Employer Sponsored Insurance.
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Based on these assumptions, approximately 328,000 births or roughly
22 percent of healthy births by privately insured women would be
affected by the provision.\16\ If each woman then stayed the maximum
period outlined in the statute, approximately 348,000 additional days
of hospital care would be required.\17\ Assuming hospitals charge $800
per day for postpartum care, the annual cost of the provision would be
$279 million: $1.7 million of which would be attributable to the
individual market in Wisconsin; the remaining $276.9 million would be
attributable to the group market in Wisconsin and self-funded plans
throughout the country. However, because the statute does not require a
48- or 96-hour stay, but instead gives the decision-making authority to
the attending physician in consultation with the mother, it is expected
that not all of these births will result in additional hospital time.
If only one-half of affected mothers had their stays extended by the
full amount, the annual cost of the provision would be $139 million,
less than $1 million of which would be attributable to the individual
market of Wisconsin.\18\
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\16\ The number of women age 10-54 with private insurance was
estimated using the 2005 MEPS-HC. Fertility rates for different age
brackets were taken from the 2005 CDC National Hospital Discharge
Survey and were interacted with the number of privately insured
women to ascertain the number of births by insured women. This was
then interacted with the share of infants that were born healthy, as
reported in the 2005 CDC report, to determine the number of healthy
births to privately-insured women.
To restrict the number of privately insured women having healthy
births to those with ESI, the share of all privately insured women,
age 10-54, that had ESI was taken from the 2007 March CPS and
interacted with the above number. To then discern the number of
births that would be covered by the regulation, the 2006 MEPS-IC was
used to ascertain the share of employees in ESI that were in self-
insured plans that had maternal coverage. This number was further
interacted by the share of employees in the share of those employees
in HMO versus non-HMO health plans as provided by the 2007 Kaiser
Family Foundation's Employer Health Benefits Survey.
Interacting all of these numbers results in the 328,000 number
cited in the text.
\17\ Based on 1995 discharge rates, approximately 94 percent of
the 328,000 births required one additional day to meet the maximum
period outlined by the statute; 6 percent required two additional
days.
\18\ The Congressional Budget Office (CBO) analyzed Senate
proposal S. 969, which was an earlier version of the Newborns' Act.
CBO estimated 900,000 insured births had stays shorter than the
minimum specified in the bill, which would result in 400,000
additional inpatient days and an additional 200,000 additional out-
patient visits at an annual cost of $360 million in 2007 dollars (or
$800 for each additional day of inpatient care; $200 for outpatient
care). The Departments' estimate is significantly less, primarily
due to: (1) A large number of states either clarifying existing
policies for short-stay deliveries or enacting new ones which
supersede the federal statute for all but self-insured plans; and
(2) the CBO estimates included costs for follow-up visits, a
requirement that was dropped from the federal statute.
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While the Departments estimate that the cost of the NMHPA is as
much as $279 million annually, health plans are estimated to have spent
m
