November 07, 2024

The Departments of Health and Human Services (HHS), Labor (DOL) and the IRS – collectively the Departments – recently released and request comments regarding a proposed rule that would update how group health plans and insurance issuers must provide preventive services without cost-sharing or prescription – focusing specifically on over-the-counter (OTC) contraceptives.

Under the Affordable Care Act (ACA), health plans must generally cover a set of preventive items and services at no additional cost to the beneficiary. Examples include screenings for certain cancers, high blood pressure, high cholesterol, Hepatitis B and C, coverage of certain medications, including pre-exposure prophylaxis (PrEP) for HIV prevention, and certain other immunizations.

The proposed rule emphasizes that group health plans and issuers must provide preventive services, including specific OTC items, without cost-sharing or prescription barriers. Notably, the rule outlines that any medical or utilization management techniques used—such as prior authorization or step therapy—must include a “clear” and “accessible" exceptions process. This requirement builds on prior subregulatory guidance (ACA FAQs Part 26 and Part 31) where similar standards for exceptions processes were set but not codified in a final rule. The Departments are now looking to formally incorporate these standards into final regulation.

The rule would also mandate that all FDA-approved contraceptives, including OTC contraceptives (such as the recently FDA-approved daily oral contraceptive brand-named “Opill”), emergency contraception (such as levonorgestrel brand-named “Plan B”) and drug-led combination products (such as contraceptive patches) be covered without cost-sharing or prescription requirements. The proposed regulation would mandate plans cover these products without cost-sharing unless a therapeutic equivalent is provided without cost-sharing.

The draft regulation also specifically requires plans cover all forms of the HIV preventive PrEP; the traditional form of PrEP is already mandated to be covered under the ACA, but this rule would extend that coverage to single-pill and injectable versions.

For plans that apply medical management techniques, such as prioritizing lower-cost generics, an exceptions process would need to be in place to ensure access to medically necessary options without cost-sharing when determined by the attending health care provider.

The proposed rule maintains the general ACA approach to not require the establishment of a network. However, for plans without a network arrangement that adequately provides access to the required items and services, the plan would have to cover 100% of the out-of-network cost so that the participant did not have to pay any amount. Under the proposed rule, plans with a network would specifically be required to cover OTC contraceptives provided by in-network pharmacies. The proposed regulation specifies that only pharmacy points of sale within a retail store (i.e., those within the pharmacy department) would qualify as in-network for OTC contraceptive coverage. Non-pharmacy points of sale, such as a cash register or vending machine elsewhere in the store, would not be required to be considered in-network for these purposes. Additionally, the Departments seek comment on their note that plans may need to cover non-preferred OTC contraceptives when a preferred option is “out-of-stock” or otherwise unavailable at an in-network pharmacy, potentially without requiring an exceptions process.

For plans requiring participants to pay out-of-pocket for OTC contraceptives and then submit for reimbursement, the proposed rule emphasizes that reimbursement processes should not impose “unreasonable” burdens. The Departments note that requiring participants to provide – for instance – a simple receipt for reimbursement would be considered reasonable, while multi-step processes that could significantly delay reimbursement may not be deemed reasonable.

The draft regulation would also require health plans to inform participants about OTC contraceptive benefits through their Transparency in Coverage (TiC) self-service tools, or in printed information if requested. This would include a mandatory disclosure that identifies covered OTC contraceptive items available without a prescription and without cost-sharing. Plans would also need to provide a phone number and internet link for enrollees to access more detailed information about contraceptive benefits.

If the rule is finalized as written, the exceptions process provisions would take effect immediately upon finalization, as the Departments believe plan sponsors ought to have reasonable exceptions processes in place because of previous guidance. The coverage requirements for OTC contraceptives and updates to TiC self-service tools would go into effect for plans beginning on January 1, 2026.

The Departments note that these changes may increase demand for contraceptive services, impacting plan costs and operational adjustments. The Business Group will be submitting comments in response to the proposed rule with a focus on the administrative implications for plan sponsors, the most efficient means of implementation and any potential challenges associated with implementation.

We provide this material for informational purposes only; it is not a substitute for legal advice.

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Resource Affordable Care Act (ACA)