The U.S. Department of Health and Human Services (HHS) has decided that Puerto Rico and other U.S. territories should be exempt from many major Patient Protection and Affordable Care Act (PPACA) provisions.
Marilyn Tavenner, the administrator of the Centers for Medicare & Medicaid Services (CMS), announced the shift in letters sent to the insurance commissioners in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands. She told the commissioners that the change applies to the parts of PPACA that added commercial health insurance requirements to the Public Health Services Act.
Many of those PPACA provisions took effect Jan. 1, 2014. They include:
- The guaranteed availability rules, which require insurers to sell coverage without taking personal health information into account.
- The community rating rules, which require insurers to base individual and small-group coverage prices mostly on community claim costs and an individual’s age.
- The essential health benefits package rules.
- The rate review system rules.
- The minimum medical loss ratio (MLR) rules, which require insurers to spend 85 percent of large-group premiums and 80 percent of individual and small-group premiums on health care and quality improvement efforts.
Many observers believed that those PPACA provisions might apply to the territories, but PPACA did not provide much exchange funding for the territories, and it provided only a modest amount of funding for expanding the territories’ Medicaid programs.
The territories decided against trying to start PPACA exchanges. HHS — the parent of CMS — recognizes that the combination of a lack of an exchange program and the tough new PPACA underwriting and pricing rules has undermined the stability of the territories’ health insurance markets, Tavenner says.
HHS also has decided that the definition of “state” given in the Public Health Services Act includes only the 50 states and the District of Columbia. Because the Public Health Services Act PPACA requirements apply only in the states, the requirements should not apply in the territories, Tavenner says.
Tavenner says in a footnote that the territories may still have to comply with PPACA provisions that changed other laws, such as the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code, and affect group health plans, because applying those PPACA provisions does not hinge on the term “state.” The HHS analysis of the Public Health Services Act definition “state” also has no effect on the rules that apply to non-federal governmental plans, she says.
Tavenner says group health plans in the territories may still have to comply with the following PPACA provisions:
- The ban on lifetime and annual benefits limits.
- The ban on policy rescissions for reasons other than fraud.
- A requirement that policies and plans cover a basic package of preventive services without imposing deductibles or co-payments on the patients.
- New requirements for internal coverage decision appeals and external coverage decision reviews.
Earlier, HHS gave the territories exchange development grants. The new analysis applies only to future actions, not past actions, and HHS will not ask the states to return exchange grant money they have already spent, Tavenner says. HHS is asking the territories to return any unspent exchange grant money.