New Developments Regarding Coverage of Contraceptives and Preventive Services

John GarnerCompliance, Legislative Updates, Resources

There have been a number of recent developments regarding coverage of contraceptives, including a definition of closely held corporations and court cases rejecting challenges to the process for accommodating the mandate to cover contraceptives.  Under the Affordable Care Act (ACA), nongrandfathered plans must cover preventive services, including women’s contraceptive services, with no cost sharing.

The Administration has finalized an alternative pathway for religious nonprofits to provide notice of their objection to covering contraceptive services.  A second action provides certain closely held for-profit entities the same accommodations and defines closely held entities for this purpose.  These rules also finalize interim final rules on preventive services coverage generally, with limited changes.

The Department of Health and Human Services (HHS), along with the Department of Labor (DOL) and the Department of the Treasury, finalized interim final rules that establish an alternative way for eligible organizations that have a religious objection to covering contraceptive services to seek an accommodation.  These rules allow these eligible organizations to notify HHS in writing of their religious objection to providing contraception coverage, as an alternative to filling out the form provided by the DOL to provide to their insurer or third-party administrator (TPA).  HHS and the DOL will then notify insurers and TPAs of the organization’s objection so that enrollees in plans of such organizations receive separate payments for contraceptive services, with no additional cost to the enrollee or organization, and no involvement by the organization.

In response to the Supreme Court’s decision in the Hobby Lobby case, the Departments also issued final rules that provide the same accommodations to closely held for-profit entities.  Relying on a definition used in federal tax law, the final rules define a “closely held for-profit entity” as an entity that is not publicly traded and that has an ownership structure under which more than 50% of the organization’s ownership interest is owned by five or fewer individuals, or an entity with a substantially similar ownership structure.  For purposes of this definition, all of the ownership interests held by members of a family are treated as being owned by a single individual.  Based on available information, the Departments say that they believe that this definition includes all of the for-profit companies that have challenged the contraceptive-coverage requirement on religious grounds.

The rules finalize standards concerning documentation and disclosure of a closely held for-profit entity’s decision not to provide coverage for contraceptive services.  These final regulations also provide that the organization’s highest governing body (such as its board of directors, board of trustees, or owners, if managed directly by the owners) must adopt a resolution (or take other similar action consistent with the organization’s applicable rules of governance and with state law) establishing that the organization objects to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs.

For each plan year to which the accommodation applies, a TPA that is required to provide or arrange payments for contraceptive services, and a health insurer required to provide payment for these services, must provide to plan participants and beneficiaries (or student enrollees and their covered dependents) written notice of the availability of separate payments for these services contemporaneous with (to the extent possible), but separate from, any application materials distributed in connection with enrollment or re-enrollment in health coverage.  Model language for this notice is provided in the regulations.

With regard to preventive services, these final regulations clarify that a plan that does not have in its network a provider who can provide a particular recommended preventive service is required to cover the preventive service when performed by an out-of-network provider, and may not impose cost sharing with respect to the preventive service.

Among the preventive services that must be covered with no cost sharing by grandfathered plans are evidence-based services rated A or B under current recommendations of the U.S. Preventive Services Task Force.  These final regulations establish that if, during a plan year, (1) an “A” or “B” recommendation or guideline of the Task Force that was in effect on the first day of a plan or policy year is downgraded to a “D” rating (meaning that the Task Force has determined that there is strong evidence that there is no net benefit, or that the harms outweigh the benefits, and therefore discourages the use of this service), or (2) any item or service associated with any preventive service recommendation or guideline that was in effect on the first day of a plan year is the subject of a safety recall or is otherwise determined to pose a significant safety concern by a federal agency authorized to regulate that item or service, there is no requirement to cover these items and services through the last day of the plan year.

Despite the existence of the accommodation for religious nonprofits, the University of Notre Dame filed a suit alleging that the process of certifying its religious objection violated its religious beliefs by triggering the provision of contraceptive coverage.  The trial court originally denied Notre Dame’s request to bar the government from enforcing the regulations and the University appealed.  The appellate court also refused to bar enforcement and after the Hobby Lobby decision Notre Dame asked the Supreme Court to send the case back to the Court of Appeals for reconsideration, which it did.  A panel of the Seventh Circuit Court of Appeals again rejected the University’s request for a preliminary injunction and now the full 7th Circuit has denied Notre Dame’s request for a rehearing.

Similarly, the 7th Circuit denied Wheaton College’s request for an injunction that would allow it to avoid complying with the contraceptive mandate.  Subsequently, Wheaton, an evangelical school in Illinois, announced that it would stop offering health insurance to students.

The 10th Circuit ruled against a group of Catholic nuns, the Little Sisters of the Poor, who refuse the accommodation.  The court ruled that signing a letter would not substantially burden their religious exercise under the Religious Freedom Restoration Act or infringe upon their First Amendment rights.

According to the ruling: “Having to file paperwork or otherwise register a religious objection, even if one disagrees with the ultimate aim of the law at issue, does not alone substantially burden religious exercise.”  And it calls the accommodation “at least as easy as obtaining a parade permit, filing a simple tax form, or registering to vote — in other words, a routine, brief administrative task.”

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