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The Contraception Coverage Controversy Continues…

Written by: Tara E. Swenson and Bridgette A. Wiley

As we have been discussing, the Affordable Care Act (“ACA”) requires all health plans to cover preventive health services for women, including all Food and Drug Administration (“FDA”)-approved contraceptives, at no cost (i.e. no deductibles, coinsurance, or co-payments).  The subsequent regulations issued to implement this requirement resulted in protests from religious employers who believe that forcing them to offer and pay for contraceptive services, something to which they are religiously opposed, violates their first amendment right to religious freedom.

To address religious freedom concerns, the Department of Labor (“DOL”) and Department of Health and Human Services (“HHS”) promulgated regulations creating an exception to the contraceptive coverage mandate for religious employers that qualify as an “eligible organization.”  An “eligible organization” is one that self-certifies that it is an “eligible organization” and therefore is not required to pay for coverage of contraceptive services for its plan members.

Employers that identified themselves as religious, both non-profit and closely-held for-profit entities, were not satisfied with this approach and looked to the court system for relief.  In the much anticipated Burwell v. Hobby Lobby case, the U.S. Supreme Court, held that the requirement to provide contraceptive products substantially burdened the exercise of religious freedom by closely-held corporations and was not the least restrictive means to ensure that women have access to these contraceptives. The Supreme Court also stated that a possible solution might be to expand the definition of “eligible organization” to include closely-held corporations.

Only three days later, the court granted an injunction to Wheaton College, a religious employer arguing that the “religious exemption” regulations effectively require an eligible organization to “sanction” contraceptive services. The Supreme Court held that, pending final appellate review, HHS cannot enforce the challenged provisions if the organization informs the HHS Secretary in writing that it is a non­profit organization that holds itself out as religious and has religious objections to providing coverage for contra­ceptive services. In short, to meet this condition for injunction, the religious organization need not use the form designated by HHS/DOL and need not send copies to health plans, third-party administrators, or PBMs.

In response to this injunction and the growing federal circuit split on whether the process for obtaining a religious exemption to the contraception mandate is overly burdensome, HHS and DOL issued an interim final rule (“IFR”) to allow an eligible organization to simply notify HHS in writing of its religious objection.  In turn, HHS or DOL will notify the health plan, third party administrator, or PBM responsible for providing enrollees in the health plan with contraceptive services at no cost for as long as they remain enrolled in the health plan.

At the same time and in response to the Hobby Lobby decision, HHS and DOL sought comments on proposed rules that would change the definition of “eligible organization” to include certain closely-held corporations that have a religious objection to providing coverage for some or all of the contraceptive services otherwise required to be covered.  The proposed rules offered two approaches to defining a “qualifying closely-held corporation” and sought comments on these approaches as well as others.

Nevertheless, Hobby Lobby Stores, Inc. and HHS continue to argue in Oklahoma federal court over the permanent injunction resulting from the Supreme Court decision and future contraceptive coverage regulations.  In a joint filing last Friday, each side offered a conflicting view of the permanent injunction, disagreeing as to whether future accommodations should be viewed as presumptively valid or presumptively invalid.  In short, the parties disagree as to whether HHS should be required to return to court prior to implementing regulations that set out a new religious accommodation.

Hobby Lobby advocates for an injunction that will prevent enforcement of the contraception coverage mandate that still allows for the possibility that HHS will put forward a religious accommodation.  In this scenario, HHS would need to return to court and explain why any new regulations are compatible with the Supreme Court’s decision.  Hobby Lobby argues that this approach is preferable because an approach that presumes any new accommodation valid which would unfairly expose them “to the prospect of yet another round of emergency briefing and 11th-hour appeals” should they wish to challenge future accommodations.

HHS argues that this proposal is “overly broad and ambiguous” and would bar any enforcement of the requirement as well as any new rules prior to HHS returning to court.  HHS states that such an injunction would “improperly treat any new regulations as presumptively invalid before they are even promulgated.”

What Does This Mean for Health Plans, TPA, and PBMS?

The obligations of health plans, third party administrators, and PBMs to provide or arrange for separate payments for contraceptive services are the same.  Between the Hobby Lobby decision, the Wheaton College injunction, subsequent IFR and proposed rules, and pending final injunction, entities are able to take advantage of the religious exemption with very little proof or demonstration that they are a religious organization. As a result, health plans, third party administrators, and PBMs stand to be increasingly put on the spot to pay for contraceptive services.

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Bridgette advises health care providers, ACOs, health plans, PBMs, and laboratories on regulatory, fraud and abuse, and business planning matters, applying her experience in health system administration and ethics in health care to her health law practice.