Proposed Rules Expand ACA Preventive Coverage to OTC Contraceptives

On October 21, 2024, the DOL, HHS, and IRS (the departments) issued proposed rules that would, among other items, expand ACA preventive service coverage requirements to include over-the-counter (OTC) contraceptive items. 

Following the US Supreme Court decision in Dobbs v. Jackson Women’s Health Organization, President Biden issued several executive orders to protect and expand access to reproductive healthcare services. Executive Order 14101, issued on June 23, 2023, specifically asked the departments to consider additional actions ‘‘to promote increased access to affordable OTC contraception, including emergency contraception.” On October 3, 2023, the departments released a request for information regarding coverage of OTC preventive items and services, including contraceptives, without a prescription; please see our October 10, 2023, article in Compliance Corner. In response, the departments received over 376 public comments, which were considered in the development of the proposed rules. 

Currently, the ACA requires non-grandfathered group health plans to cover OTC contraceptives as preventive care only if prescribed by a healthcare provider. Under the proposed rules, plans would be required to cover recommended OTC contraceptive items without requiring a prescription or cost-sharing from participants. Plans that have a network of providers, such as pharmacies (including mail-order pharmacies) that can provide OTC contraceptive items would not be required to cover OTC contraceptive items provided by out-of-network (OON) providers. However, plans that lack in-network (INN) providers of OTC contraceptive items would be obligated to cover OTC contraceptive items without cost-sharing provided by OON providers. The proposed rules would not modify federal conscience protections related to contraceptive coverage for plans and plan sponsors.

Under the proposed rules, network coverage for OTC contraceptive items and services would generally be provided in a manner comparable to coverage for other recommended preventive services (e.g., plans should not impose shipping costs on OTC contraceptive items furnished via mail order if the plans would not impose such costs on comparable prescription products). Further, plans must ensure their processes to reimburse participants for out-of-pocket OTC contraceptive items are reasonable. 

The departments acknowledge concerns regarding overconsumption, fraud, waste, or abuse that could be increased by OTC contraceptive coverage without a prescription but anticipate that plans would be able to mitigate these risks by using existing claims processing systems with respect to INN coverage. However, the departments recognize there may be challenges (particularly with respect to privacy concerns) in the context of OON coverage and request comments regarding these issues. The departments have also requested comments regarding reasonable quantity limits for OTC oral contraceptives but note that a one-month supply would generally not be considered reasonable. 

In addition, the proposed rules would require plans to cover certain recommended contraceptive items that are drugs and drug-led combination products (i.e., comprising a drug and a device for which the drug component provides the primary mode of action) without cost-sharing, unless a therapeutic equivalent is covered without cost-sharing. (For more information on therapeutic equivalents, please see the DOL ACA Implementation FAQs Part 64.) The departments believe this requirement, which was previously an option, will ensure coverage of the full range of FDA-approved contraceptive items and protect against narrow drug formularies.

Furthermore, the proposed rules require disclosure of the available OTC contraceptive coverage in plans’ Transparency in Coverage internet-based self-service tools (or, if requested, on paper). Specifically, if a participant requests cost-sharing information for any covered contraceptive item or service through such a tool, the information provided in response must include a statement explaining that OTC contraceptive items are covered without cost-sharing and without a prescription. 

With respect to preventive care coverage generally, the proposed rules would codify that medical management techniques (e.g., to contain costs, promote efficiencies, and minimize risks of fraud, waste, and abuse) would not be considered reasonable (and thus permissible) unless the plan provides an easily accessible, transparent, and sufficiently expedient exceptions process. The exceptions process must allow a participant to receive coverage without cost-sharing for a preventive item or service that is medically necessary, as determined by the participant’s attending provider, even if such item or service is not generally covered under the plan. For example, if a participant experiences side effects from a generic preventive item, the plan may need to cover the brand name version without cost-sharing, if determined to be medically necessary for the participant by their healthcare provider. Relevant information regarding the exceptions process would need to be included in plan documents and other materials (including the plan’s website) that describe preventive services coverage. The departments have requested comments on how the proposed exceptions process requirement should apply to OTC contraceptive items (for which no provider involvement is generally required). 

Plan sponsors should be aware of the issuance of these proposed rules. As proposed, the OTC contraceptive coverage requirements would generally be applicable for plan years beginning in 2026. However, the general preventive service requirements regarding the medical management exceptions process would apply on the effective date of the final rules. Sponsors wishing to submit comments, including whether the proposal related to coverage of OTC contraceptives should be extended to other recommended preventive items and services (e.g., tobacco cessation items), may do so by December 27, 2024, in accordance with the instructions in the proposed rules. Sponsors should monitor for further guidance, and we will provide updates on relevant developments in future editions of Compliance Corner. 

Federal Register: Proposed Rule; Enhancing Coverage of Preventive Services Under the ACA