WASHINGTON -- Federal regulations issued last week provide long-awaited guidance to employers on how to comply with the law that sets minimum hospitalization coverage requirements for women and their newborns after delivery.

Under the Newborns' and Mothers' Health Protection Act of 1996, group health care plans must cover inpatient care for at least 48 hours after a normal vaginal delivery and 96 hours after a Caesarean section.

While the law's basic requirements are straightforward, questions have popped up in several areas, including:

* Exactly when the 48-hour and 96-hour clocks start ticking.

* What incentives, if any, health care plans can provide to encourage women to leave the hospital before the mandated length-of-stay requirements expire.

The regulations, published in the Oct. 27 issue of the Federal Register, provide answers to those and other questions.

"In general, the rules appear to be a reasonable interpretation of the statute," said Pamela Scott, a principal with PwC Kwasha in Fort Lee, N.J.

The rules, which for most employers will go into effect Jan. 1, use examples to answer questions about the law. Some of the questions that have arisen include:

Q: The law bars health care plans from restricting hospital coverage to less than 48 hours following a vaginal delivery and 96 hours following a Caesarean section. Exactly when do those time periods begin?

A: In general, for births in the hospital, the coverage periods start after delivery, or in the case of multiple births, after the last delivery.

For example, assume a woman goes into labor and is admitted to the hospital at 10 p.m. on June 11. She gives birth by vaginal delivery at 6 a.m. on June 12. In this example, the 48-hour period would end at 6 a.m. on June 14.

Employers will welcome this guidance on the time issue.

"There was some uncertainty on when the clock started," said Henry Saveth, an attorney with William M. Mercer Inc. in Washington.

Q: How do the coverage periods apply if the delivery occurs outside the hospital, such as at home, and the woman later is admitted to the hospital because of complications?

A: In those situations, the clock starts running when the woman is admitted to the hospital.

The rules provide an example of a woman who gives birth at home by vaginal delivery. After delivery, the woman begins to bleed excessively in connection with the childbirth and is admitted to the hospital for treatment of the bleeding.

Assume the woman is admitted to the hospital at 7 p.m. on Oct. 1. In this case, the 48-hour period would end at 7 p.m. Oct. 3.

Q: Do the minimum length-of-stay requirements apply in situations where health care problems -- unrelated to delivery -- develop in childbirth outside the hospital?

A: The length-of-stay requirements apply only for admissions connected to childbirth.

For example, a woman gives birth at home. The child later develops pneumonia and is admitted to a hospital. The provider determines the admission was unrelated to childbirth. As a result, the minimum hospital length-of-stay requirements do not apply.

Q: Can a health care plan require a provider to obtain authorization from the plan for prescribing the hospital length of stay?

A: The rules generally bar such an authorization requirement if authorization is required for stays shorter than or equal to the 48- and 96-hour minimums.

For example, in hospitalizations exceeding 72 hours, assume a plan requires an attending provider to complete a certificate of medical necessity. The plan then decides if a longer stay is necessary.

The rules would bar such a requirement for the period between 72 hours and 96 hours following delivery by Caesarean section.

Q: Can a woman or newborn be discharged before the expiration of the 48- and 96-hour minimum length of stay coverage requirements?

A: Yes, so long as the attending provider makes this decision in consultation with the mother.

Q: Can a plan provide payments or rebates to a mother to accept less than the minimum coverage periods?

A: The rules bar "payments (including payment-in-kind) or rebates to a mother to encourage her to accept less than the minimum protections" provided by law.

Assume a health care plan agrees to waive its copayment and deductible if a mother and newborn are discharged within 24 hours after delivery. Such an arrangement, the rules say, are illegal because the waiver is "in the nature of a rebate that the mother would not receive if she and the newborn remained in the hospital."

Q: Notwithstanding the prohibition on payments-in-kind, can a plan provide after-discharge, follow-up services by a nurse to a mother and newborn who are discharged early?

A: Yes, this would be allowed, so long as the plan did not offer coverage for the follow-up visit by a nurse beyond what the mother and newborn would receive in the hospital.

Q: Can a health care plan have higher cost-sharing features for the latter part of a 48-hour or 96-hour minimum length of stay coverage requirement?

A: While a health care plan is not barred from imposing deductibles, copayments or other cost-sharing requirements for childbirth, those requirements must be consistent for the duration of the mandated coverage.

A type of prohibited cost-sharing arrangement would be one in which a plan pays 80% of the cost of stay for the first 24 hours of hospital confinement and 50% for the second 24 hours of confinement.

Q: Can a health care plan provide greater coverage if a pregnant mother notifies the plan in advance of her admission to the hospital and uses a hospital the plan designates?

A: Such an arrangement is permissible so long as the level of benefits is consistent throughout the 48- and 96-hour coverage periods.

For example, assume a plan generally covers 70% of the cost of hospitalization in connection with childbirth. However, the coverage is boosted to 80% if the participant notifies the plan of her pregnancy and uses whatever hospital the plan designates.

In that situation, the rules are not violated because the level of benefits -- 70% or 80% -- is consistent throughout the hospital length-of-stay requirements.

Q: Can health plans negotiate rates with providers in connection with childbirth?

A: Health care plans are free to negotiate rates with providers. However, no incentives, such as a cash bonus, can be offered that would induce a provider to discharge a mother or newborn prior to 48 hours in the case of a vaginal delivery or 96 hours in the case of a Caesarean section.