The Department of Labor (DOL), the IRS, and the Department of Health and Human Services (HHS) have jointly issued a FAQ that addresses how "reference-based pricing" works with the Patient Protection and Affordable Care Act's (PPACA) restrictions on out-of-pocket maximums. PPACA limits the out-of-pocket maximum a non-grandfathered plan may impose, and generally requires that co-pays, coinsurance, and deductibles be counted toward this limit. However, premiums, balance billed amounts for non-network providers, and non-covered services do not need to be applied to the out-of-pocket limit. (For 2015, the limits are $6,600 per individual or $13,200 per family.) The new FAQ explains how the out-of-pocket limit applies to plans that use reference-based pricing--i.e., a design under which the plan pays a fixed amount for a particular procedure (such as a knee replacement), which certain providers have agreed to accept as full payment.
The FAQ states that the agencies will permit the reference price to be treated as the in-network price, as long as the plan uses a reasonable method to provide adequate access to quality providers who are willing to accept the reference price. The agencies will determine whether a plan that uses reference-based pricing (or a similar network design) is using a reasonable method to ensure adequate access to quality providers based on:
- The Type of Service. Plans may treat providers that accept the reference price as the sole network providers only for those services for which consumers have enough time to make an informed choice of provider. For example, this design is not appropriate for emergency services.
- Reasonable Access. Plans should ensure the availability of an adequate number of providers that accept the reference price. Considerations include network adequacy approaches developed by the states, geographic distance measures, and patient wait times.
- Quality Standards. Plans should ensure that an adequate number of providers accepting the reference price meet reasonable quality standards.
- Exceptions Process. Plans should offer an easily accessible exceptions process when access to a provider that accepts the reference price is unavailable or would compromise the quality of services for a particular individual because, for example, of the patient's other medical issues.
Disclosure. Plans should provide, automatically and free of charge, information about the pricing structure, including the services to which it applies and the exceptions process. In addition, the plan should provide specified information, such as provider lists, upon request.
For more information to help you benchmark your health plan’s out of pocket limits with other employers of similar size, industry and geography, pre-order the 2014 UBA Health Plan Survey Executive Summary which will soon be available with the latest data from nearly 17,000 plans.