Clarification of Final Rules for Grandfathered Plans, Preexisting Condition Exclusions, Lifetime and Annual Limits, Rescissions, Dependent Coverage, Appeals, and Patient Protections under the Affordable Care Act, 26 CFR Part 54, 29 CFR Part 2590, and 45 CFR Parts 144, 146, and 147, 83 Fed. Reg. 19431 (May 3, 2018)
The DOL, IRS, and HHS have responded to a federal court’s ruling that the agencies acted arbitrarily and capriciously in adopting final regulations under the Affordable Care Act (ACA) patient protections provisions for emergency services (see our Checkpoint article). As background, interim final rules published in June 2010 (see our Checkpoint article) provided that a non-grandfathered plan satisfies the requirement that it not impose higher copayments or coinsurance amounts on emergency medical treatment simply because the treatment was provided by an out-of-network provider, if it pays benefits for such services in an amount equal to the greatest of three possible amounts—(1) the in-network rate, (2) the out-of-network rate, and (3) the Medicare rate.
Some providers and associations objected to the second prong as lacking transparency and being subject to manipulation by insurers, since it is calculated using the method the plan generally uses to determine payments for out-of-network services (such as usual, customary, and reasonable (UCR) charges) but substituting the in-network copayment or coinsurance amount for the out-of-network amount. However, the agencies issued final regulations in 2015 without making any substantive revisions (see our Checkpoint article). And when a provider association challenged the regulations, a court ruled that the agencies did not “seriously respond” to the concerns raised in comments and sent the regulations back to the agencies to address the comments and proposals in a reasoned manner.
The agencies have now provided the additional consideration required by the court’s order and have clarified why they believe that the methodology in the regulations is transparent and reasonable. Among other things, they explain that they believe the patient’s ability to obtain and to potentially challenge the calculations used to arrive at the allowed amount through the appeals process or litigation creates adequate safeguards to the association’s concerns regarding health insurer manipulation of UCR amounts. And the provider can obtain this information as a patient’s authorized representative. They also explain that they rejected the association’s comment proposing that they use an independent database instead of the UCR charges as this would require the agencies to extend the scope of statutory authority in an area reserved for states, insurers, and health plans. And the establishment and maintenance of a publicly available database would be time-consuming, costly, and burdensome, with no indication that it would be a better measure of UCR amounts than the current methodology used by plans and insurers. The agencies concluded that based on this reasoning, they decline to adopt the suggestions of the association and other commenters that made similar suggestions.
EBIA Comment: If this challenge continues, it will be up to the court to decide if the agencies’ response sufficiently demonstrates that the implementing regulations provide a transparent and reasonable methodology to determine the appropriate payments by plans for out-of-network emergency services. Health insurers, plan sponsors, and advisors will want to monitor further developments in the case. Because the court had declined to vacate the regulations, they continue to remain binding. For more information, see EBIA’s Health Care Reform manual at Section XII.B (“Patient Protections”). See also EBIA’s Group Health Plan Mandates manual at Section XIII.B (“Patient Protections”) and EBIA’s Self-Insured Health Plans manual at Section XIII.C.6 (“Federally Mandated Benefits: Patient Protections”).
Contributing Editors: EBIA Staff.