By Lara Cartwright-Smith

Background

Recent federal regulations requiring insurance coverage of contraception have generated controversy, especially as applied to religious employers. The requirement stems from an ACA provision requiring insurance coverage of preventive services.

The Affordable Care Act Provisions

Section 2713 of the Public Health Service Act, as added by Section 1001 of the Patient Protection and Affordable Care Act (ACA),^[1] requires group health plans and health insurance issuers offering group or individual health insurance coverage to provide coverage without cost-sharing for certain preventive services, including preventive treatments and services for women recommended by The Health Resources and Services Administration (HRSA) in guidelines. The preventive services provisions of the Act do not apply to “grandfathered” plans,^[2] but do apply to ERISA-governed group health plans that purchase insurance coverage and those that self-insure.^[3]

The Implementing Regulations

On July 19, 2010, the Departments of Treasury, Labor, and Health and Human Services (HHS) jointly issued “Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Coverage of Preventive Services Under the Patient Protection and Affordable Care Act”^[4] (hereafter IFR). At that point, HRSA had not yet issued comprehensive guidelines but was expected to do so by August 1, 2011. Following a report by the Institute of Medicine recommending comprehensive coverage of contraceptive services,^[5] HRSA issued guidelines on August 1, 2011, adopting the IOM recommendations.^[6] Specifically, HRSA’s guidelines recommend health insurance coverage of “[a]ll Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity,” as prescribed.^[7] Shortly thereafter, on August 3, 2011, the Departments published an Amended Interim Final Rule (hereafter Amended IFR),^[8] that incorporated HRSA’s Required Health Plan Coverage Guidelines for Women’s Preventive Services. The Amended IFR contained an additional 60-day public comment period but took effect as of August 1, 2011, so that mandatory coverage by non-grandfathered group and individual insurance plans of all preventive services without cost sharing would begin on August 1, 2012.

In response to comments on the 2010 initial IFR regarding the application of the preventive services requirement to religious employers, the Departments gave HRSA “additional discretion to exempt certain religious employers from the Guidelines where contraceptive services are concerned.”^[9] The 2011 Amended IFR defined a religious employer, for purposes of the policy, as “one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization under [certain sections of the Code].” This definition was based on definitions used by states that exempt religious employers from compliance with state mandates to cover contraceptive services. It is a narrow exemption that effectively covers churches and other religious houses of worship but not religiously-affiliated non-profit institutions such as hospitals, universities, and social service agencies.

On January 20, 2012, in response to concern around the narrow definition of religious exemption, the Secretary of HHS announced, without amending the 2011 Amended IFR,^[10] that religiously-affiliated employers not covered by the exemption would have an additional year (until August 1, 2013) to comply with the Amended IFR. However, intense opposition to the narrow exemption, including the United States Conference of Catholic Bishops (USCCB),^[11] led to a further refinement of the 2011 Amended IFR.

The February 2012 Final Rule

On February 10, 2012, the Administration released a final rule, designed to accommodate religiously-affiliated employers without broadening the original religious exemption.^[12] The final policy^[13] maintains the Amended IFR’s religious exemption and retains the one-year grace period for religiously-affiliated organizations that the Secretary had announced in January. In addition, for religiously-affiliated employers that are not exempted, the final rule announces the Administration’s intention to adopt a new policy that insurance companies providing coverage to such employers will be required to cover contraceptive services free of charge, so that the employer will not be compelled to provide contraceptive coverage, but the covered employees will still have access to contraceptive services (as defined in HRSA guidelines) without cost-sharing. (The mandate on insurers is not expected to result in higher costs for either insurers or employers and employees because of the cost-reducing impact of contraceptive coverage on plan premiums).^[14] The final rule codifies the 2011 Amended IFR without any modification, but in the preamble to the final rule, the Departments state their intent to produce a new rule during the one-year grace period for religiously-affiliated employers (the “temporary enforcement safe harbor”) that will set forth the requirements for insurers.^[15]

Key Issues

A broader religious exemption? The accommodation has not quelled support among numerous interest groups for a broader religious exemption reaching all religiously-affiliated employers (and for some advocates, all employers that claim a conscience-based objection to coverage of contraceptive services). Advocates for a broader exemption have issued statements rejecting the compromise policy announced in the final rule^[16] and the Senate Minority Leader announced his intention to introduce legislation to overturn the preventive services mandate.^[17] Whether these efforts will succeed is unclear, but it is notable that 28 states already require insurance coverage of contraception,^[18] and both state and federal courts have upheld public health laws when universally and non-discriminatorily applied.^[19] In addition, some religious organizations have praised the Administration’s accommodation.^[20]

Self-insured plans? Many religiously-affiliated employers’ health plans are self-insured, meaning that the employer bears the cost of employees’ health claims rather than an insurance company. How the final rule will accommodate these employers is not yet clear and was not specifically addressed in the February rule. The Obama Administration will consider this issue further during the safe harbor period.^[21]