H&W: FAQs on Cost Sharing and Provider Non-discrimination

On May 26, 2015, the DOL, HHS and IRS (“Departments”) released FAQs relating to the Limitations on Cost Sharing and Provider Non-discrimination rules under the Affordable Care Act clarifying certain questions received from stakeholders.

Clarification of Limitations on Cost Sharing Rule.  Are Self-insured & Large Group plans impacted?

Limitations on Cost Sharing:  These FAQs confirmed that the self-only maximum annual imitation on cost sharing (that goes into effect for plans beginning in 2016 or later) applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in coverage other than self-only and it applies to ALL non-grandfathered group health plans including self-insured and large group health plans.  There had been some question as to whether it applied to self-insured or large group health plans.

The Provider Non-discrimination rule.  Will it be enforced?

Provider Non-discrimination:  The FAQs also addressed prior confusion relating to Provider Non-Discrimination.  PHS Act section 2706(a) which addresses Provider Non-Discrimination states that a “group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.”    The law goes on to provide that this does not “require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer”, nor does it prevent “a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures”.

In 2013, the government issued an FAQ purporting to clarify the meaning of these provisions.  It stated that:

Until any further guidance is issued, group health plans and health insurance issuers offering group or individual coverage are expected to implement the requirements of PHS Act section 2706(a) using a good faith, reasonable interpretation of the law. For this purpose, to the extent an item or service is a covered benefit under the plan or coverage, and consistent with reasonable medical management techniques specified under the plan with respect to the frequency, method, treatment or setting for an item or service, a plan or issuer shall not discriminate based on a provider’s license or certification, to the extent the provider is acting within the scope of the provider’s license or certification under applicable state law. This provision does not require plans or issuers to accept all types of providers into a network. This provision also does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.

This, in turn, garnered the attention of Congress.  In a committee report, Congress expressed its concern that:

the FAQ … advises insurers that this nondiscrimination provision allows them to exclude from participation whole categories of providers operating under a State license or certification. In addition, the FAQ advises insurers that section 2706 allows discrimination in reimbursement rates based on broad ‘‘market considerations’’ rather than the more limited exception cited in the law for performance and quality measures. Section 2706 was intended to prohibit exactly these types of discrimination. The Committee believes that insurers should be made aware of their obligation under section 2706 before their health plans begin operating in 2014. The Committee directs HHS to work with DOL and the Department of Treasury to correct the FAQ to reflect the law and congressional intent within 30 days of enactment of this act.

In March 2014, the Departments issued a Request for Information (“RFI”) seeking input on “all aspects of the interpretation of section 2706(a).”

After reviewing comments received following the RFI, the Departments have chosen to respond to these questions by restating their enforcement approach.  “Until further guidance is issued, the Departments will not take any enforcement action against a group health plan or health insurance issuer offering group or individual coverage, with respect to implementing the requirements of PHS Act section 2706(a) as long as the plan or issuer is using a good faith, reasonable interpretation of the statutory provision.”

While this article has concentrated on the regulatory history of this provision to an extent greater than that normally seen in these blogs, we believe that an understanding of it is an important element in a plan’s good faith interpretation of this somewhat confusing section of the ACA.