On October 21, 2024, the U.S. Department of Health and Human Services, Labor Department, and the Treasury Department (collectively “the Departments”) jointly released a proposed rule that would require insurers to expand coverage of and eliminate cost sharing on certain preventative services, including over-the-counter (“OTC”) contraceptive items and certain Food and Drug Administration (“FDA”) approved prescription birth control medications. The rule would require private health plans to provide new disclosures to beneficiaries regarding coverage of these services with no cost-sharing obligations.

According to the fact sheet issued by the White House, the rule if finalized would expand free birth control coverage for 52 million American women of reproductive age who are covered by private health insurance and would reduce barriers to coverage of contraceptive services, including OTC contraceptives.

However, there is some complexity to the finalization of this rule. The incoming Trump administration could follow the recommendations of Project 2025 and rescind this rule in whole or in part. Additionally, if the rule is finalized, it currently falls within the Congressional Review Act look-back period and that could result in a Republican-controlled Congress disapproving the rule in its entirety next year.

Background

The Affordable Care Act added section 2713 of the Public Health Service Act, which requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to provide coverage for certain recommended preventive services without imposing any cost-sharing requirements, such as a copayments, coinsurance, or deductibles.

These preventive services include:

• certain evidence-based items or services recommended by the United States Preventive Services Task Force with respect to the individual involved
• immunizations recommended by the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention
• preventive care and screenings for infants, children, and adolescents recommended by the Health Resources and Services Administration (“HRSA”)
• preventive care and screenings for women as provided for in comprehensive guidelines supported by HRSA.

Notably, a final rule on Transparency in Coverage issued in November 2020, the waning days of the last Trump administration, enumerated cost-related elements that plans and issuers must disclose in response to a search query by a participant, beneficiary, or enrollee for a covered item or service furnished by a provider or providers.

With respect to requests for cost-sharing information for items or services that are recommended preventive services under section 2713 of the PHS Act, if the plan or issuer cannot determine whether the request is for preventive or non-preventive purposes, the plan or issuer must display the cost-sharing liability that applies for non-preventive purposes along with a statement that the item or service may not be subject to cost sharing if it is billed as a preventive service. Plans and issuers must ensure users can search for cost-sharing information for a covered item or service by a specific in-network provider or by all in-network providers using either a descriptive term or a billing code.

Following the U.S. Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, President Biden issued Executive Order 14076, “Protecting Access to Reproductive Healthcare Services” (E.O. 14076) on July 8, 2022. Section 3 of E.O. 14076 requires the Secretary of HHS to identify potential actions to “protect and expand access to the full range of reproductive healthcare services, including actions to enhance family planning services such as access to emergency contraception” and identify “ways to increase outreach and education about access to reproductive healthcare services, including by launching a public awareness initiative to provide timely and accurate information about such access, which shall . . . include promoting awareness of and access to the full range of contraceptive services.” 

Thereafter, on June 23, 2023, President Biden issued Executive Order 14101, “Strengthening Access to Affordable, High-Quality Contraception and Family Planning Services” (E.O. 14101).   Section 2 of E.O. 14101 directs the Secretaries to consider issuing guidance “to further improve Americans’ ability to access contraception, without out-of-pocket expenses, under the Affordable Care Act” and to consider additional actions “to promote increased access to affordable over-the-counter contraception, including emergency contraception.” While both of these executive orders are at risk in the incoming Trump administration and will likely be rescinded, the aspects of this proposed rule that increase transparency and reduce cost-sharing for these services may be able to survive.

Summary of proposed rule

According to the text of the proposed rule, the Departments are interested in minimizing barriers to coverage and expanding the scope of coverage without cost sharing for all recommended preventive services, in alignment with section 2713 of the PHS Act. 

• For example, only one daily birth control pill is approved for sale by the FDA for dispensing over the counter without a prescription. However, the proposed rule would also cover other forms of over-the-counter contraceptives, including emergency contraception, spermicides, birth control sponges and condoms.
• The rule would require health plans to cover all FDA-approved contraceptive drugs and some devices, including IUDs, without cost-sharing in many cases. It would also require private health plans to disclose to customers that those contraceptives are covered without cost-sharing.
• The Departments have determined that requiring coverage of OTC contraceptive items without cost sharing and without a prescription, as proposed in this rule, is critical to ensuring that coverage requirements provide women with access to contraceptives as required under section 2713 of the PHS Act and the applicable HRSA-supported Guidelines, and to realizing the goal of promoting access to reproductive health care.
• Under this proposal, the requirement to cover OTC contraceptive items would be subject to the specific coverage requirements applicable to all recommended preventive services. However, the Departments recognized that the provision and coverage of OTC contraceptive items present unique issues that plans and issuers may not encounter when covering other recommended services. Therefore, they set forth a proposal of how plans and issuers would be expected to comply with certain existing requirements with respect to coverage of OTC contraceptive items.

The Departments acknowledged the possibility that increasing coverage without cost sharing for recommended preventive services could lead to greater demand for those services and potentially higher prices charged by providers. These increased costs could result in higher costs to consumers, both in the form of higher premiums for people with insurance and in the form of higher out-of-pocket costs for people who do not use insurance coverage to obtain OTC contraceptive products.

According to the Departments, the potential increases in cost further justify the incremental approach taken in these proposed rule. In addition, comments in response to a 2023 Request for Information on the coverage of over the counter  preventive services  suggested that requiring coverage of all OTC preventive products may be challenging for some types of preventive care. For these reasons, the Departments proposed to amend only the preventive services regulations governing contraceptive items at this time. The Departments claimed that issuance of these proposals implementing section 2713 of the PHS Act is authorized by section 9833 of the Internal Revenue Code, section 734 of ERISA, and section 2792 of the PHS Act.

The major changes to those regulations are as follows:

1. First, the Departments propose to define the terms “drug-led combination product” and “therapeutic equivalent”.
2. Second, the Departments propose to require that plans and issuers cover, without requiring a prescription and without imposing cost-sharing requirements, recommended contraceptive items that are available OTC and for which the applicable recommendation or guideline does not require a prescription.
3. Third, the Departments propose that, in order for medical management techniques to be considered reasonable, plans and issuers would be required to utilize a therapeutic equivalence approach for recommended contraceptive drugs and drug-led combination products.

The Departments have determined that requiring coverage of OTC contraceptive items without cost sharing and without a prescription, as proposed in this rule, is critical to ensuring that coverage requirements provide women with access to contraceptives as required under section 2713 of the PHS Act and the applicable HRSA-supported Guidelines, and to realizing the goal of promoting access to reproductive health care.

Exceptions process for all recommended preventive services

The regulations implementing section 2713 of the PHS Act aim to strike a balance between ensuring participants, beneficiaries, and enrollees do not face undue barriers to accessing their coverage of recommended preventive services as required by law and allowing plans and issuers to contain costs, promote efficient delivery of care, and minimize risks of fraud, waste, and abuse. To this end, current regulations permit plans and issuers to use reasonable medical management techniques to determine the frequency, method, treatment, or setting for coverage of a recommended preventive service, to the extent not specified in the applicable recommendation or guideline.

The Departments have previously explained, in the context of certain recommended preventive services, that they generally do not consider medical management techniques with respect to recommended preventive services to be reasonable absent the availability of an exceptions process. Under this proposed rule, if the recommended preventive service covered by the plan or issuer is not medically appropriate for the individual, as determined by the individual’s attending provider, the plan or issuer would be required, through the exceptions process, to cover, without cost sharing, an alternative recommended preventive service that the individual’s attending provider determines is medically necessary for that individual.

Consistent with prior guidance, the Departments would determine whether a plan’s or issuer’s exceptions process is easily accessible, transparent, sufficiently expedient, and not unduly burdensome based on all relevant facts and circumstances, including whether and how a plan or issuer provides notice of the availability of an exceptions process and what steps an individual or their provider or other authorized representative is required to initiate and complete in order to seek an exception.

Applicability dates and comment period

The Departments have proposed that the requirement to provide an exceptions process for all recommended preventive services would be applicable on the effective date of the final rules; and the proposals specific to contraceptive coverage (including the OTC contraception coverage proposal, therapeutic equivalence proposal, and transparency in coverage disclosure proposal related to OTC contraceptive coverage information) would be applicable for plan years (or, in the individual market, policy years) beginning on or after January 1, 2026.

Written comments on the rule must be received by December 27, 2024. If finalized, the rule is expected to go into effect sometime in 2025. It would be the largest expansion of contraceptive coverage under the ACA since 2012. However, it is possible that the rule could be frozen as part of the transition to the new Trump administration and possibly rescinded in whole or in part.

Reed Smith will continue to follow developments with regard to the proposed rules. If you have any questions about this opinion or its implications, please contact the health care lawyers at Reed Smith.