In Affordable Care Act Implementation Frequently Asked Questions (FAQs Part XXI), the U.S. Department of Labor (the “DOL”) provides guidance on reference pricing and the annual cost- sharing limit.
Background. Public Health Service (“PHS”) Act section 2707(b), as added by the Affordable Care Act, provides that a non-grandfathered group health plan must ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under section 1302(c)(1) of the Affordable Care Act. Section 1302(c)(1) limits an enrollee’s out-of-pocket costs. For plan years beginning in 2015, the annual limit on an individual’s maximum out-of-pocket (“MOOP”) costs in effect under Affordable Care Act section 1302(c)(1) is $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage. The limit is adjusted for inflation for subsequent plan years.
Previous Guidance. Previous FAQs on MOOP clarified that if a plan includes a network of providers, the plan need not (but may if it wishes) count an individual’s out-of-pocket spending for out-of-network items and services toward the annual limit on cost-sharing.
The previous FAQs also addressed reference-based pricing in non-grandfathered large group insurance market and self-insured group health plans (“Affected Plans”). Reference pricing means that the Affected Plan pays a fixed amount for a particular procedure (for example, a knee replacement), which certain providers will accept as payment in full.
The FAQs further stated that, until guidance was issued and effective, the DOL (and the other agencies which enforce the Affordable Care Act) will not treat an Affected Plan as failing to comply with the MOOP requirements, merely because the plan treats providers that accept the reference amount as the only in-network providers, as long as the plan uses a reasonable method to ensure that it offers adequate access to quality providers. That is, so long as the proviso is met, the providers who accept reference pricing may be treated as in-network, so the annual cost-sharing limit will apply to their services (and the agreed upon fee mitigates the limit from the plan’s perspective). Consequently, any provider who does not accept the reference pricing is treated as out-of-network, and may (unless the plan chooses otherwise-not a likely event) provide services without any cost-sharing limit.
The Concern And This FAQ. Will the foregoing rule on establishing the in-network fail to provide adequate access to quality providers? This FAQ says the following on this concern:
Pending issuance of future guidance, for purposes of enforcing the requirements in PHS Act section 2707(b), the DOL (and the other agencies which enforce the Affordable Care Act) will consider all the facts and circumstances when evaluating whether a plan’s reference-based pricing design (or similar network design) that treats providers that accept the reference-based price as the only in-network providers, and excludes or limits cost-sharing for services rendered by other providers, is using a reasonable method to ensure adequate access to quality providers at the reference price, including:
1. Type of service. Plans should have standards to ensure that the network is designed to enable the plan to offer benefits for services from high-quality providers at reduced costs, and does not function as a subterfuge for otherwise prohibited limitations on coverage. For this purpose:
a. In general, reference-based pricing that treats providers that accept the reference amount as the only in-network providers should apply only to those services for which the period between identification of the need for care and provision of the care is long enough for consumers to make an informed choice of provider.
b. Limiting or excluding cost-sharing from counting toward the MOOP with respect to providers who do not accept the reference-based price would not be considered reasonable with respect to emergency services. Furthermore, any provision in an Affected Plan that involves a more restrictive network cannot be applied to emergency services pursuant to PHS Act section 2719A (incorporated by reference into ERISA section 715 and Code section 9815) and its implementing regulations.
2. Reasonable access and quality. Plans should have procedures to ensure that an adequate number of providers that accept the reference price are available to participants and beneficiaries and meet reasonable quality standards.
3. Exceptions process. Plans should have an easily accessible exceptions process, allowing services rendered by providers that do not accept the reference price to be treated as if the services were provided by a provider that accepts the reference price if:
a. Access to a provider that accepts the reference price is unavailable (for example, the service cannot be obtained within a reasonable wait time or travel distance).
b. The quality of services with respect to a particular individual could be compromised with the reference price provider (for example, if co-morbidities present complications or patient safety issues).
4. Disclosure. Plans should provide the following disclosures regarding reference-based pricing (or similar network design) to plan participants free of charge.
a. Automatically. Plans should provide information automatically (e.g., in the SPD) regarding the pricing structure, including a list of services to which the pricing structure applies and the exceptions process.
b. Upon Request. Plans should provide upon request:
i. A list of providers that will accept the reference price for each service;
ii. A list of providers that will accept a negotiated price above the reference price for each service; and iii. Information on the process and underlying data used to ensure that an adequate number of providers accepting the reference price meet reasonable quality standards.