If an employer wants to have an insured, grandfathered health plan, it ought to stick with the same insurer, according to the officers of the National Association of Insurance Commissioners (NAIC).
Regulators at the agencies responsible for implementing the Affordable Care Act – the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) – released interim final regulations in November 2010 that give employers, insurers and others advice on applying the "grandfathered health plan" provision in the package.
The provision exempts group plans that were in effect March 23, 2010, from many 
of the coverage requirements, such as new appeals rules and preventive care benefits standards, that are being imposed on newer plans.
The federal agencies – the U.S. Department of Health and Human Services, the U.S. Labor Department and the U.S. Treasury Department – earlier had ruled that employers could shift to new insurance policies and keep grandfathered status.
In the interim final regulations, the agencies say employers can shift to new insurers and retain grandfathered status, as long as the new plans meet the same similarity standards that would affect comparisons of old and new plans from the same insurer.
The Employee Benefits Security Administration, an arm of the Labor Department, has posted a total of 14 comments on the interim final grandfathered health plan regulations.
Representatives of the Blue Cross Blue Shield Association, Chicago, and the Council of Insurance Agents & Brokers (CIAB), Washington, have written to welcome the provision letting employers switch carriers and keep grandfathered status.
The provision will help employers shop for affordable coverage
and also help them deal with events such as carrier market withdrawals, representatives for the Blues and the CIAB say.
The Blues and the CIAB have asked that the agencies make the insurer-switch provision retroactive to March 23, 2010. The current rule makes the provision effective Nov. 15, 2010, and does not make the provision retroactive.
The top officers at the NAIC, Kansas City, Mo., and Sandy Praeger – an elected, Republican Kansas insurance commissioner who is chair of the NAIC's Health Insurance & Managed Care Committee – have written to object to the insurer-switch provision.
"State regulators are concerned that this amendment will create a new marketplace for 'grandfathered' plans that will be difficult to police and will become a magnet for fraudulent activities," NAIC officials write in their comment letter.
Enforcing the amended rule will be difficult, because there is no straightforward way of monitoring the marketplace for fraudulent grandfathered plans, officials say.
"Instead, regulators will be forced to determine whether each sale of a grandfathered plan is valid on an employer-by-employer basis," officials say. "At a time when state Insurance Departments are already dedicating significant resources to implementing the other changes required by PPACA, this labor-intensive regulatory process will be very difficult to maintain."
The amendment also could lead to antiselection, by encouraging younger, healthier small group plans to stay in the grandfathered plan market, officials say.
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