Departments Issue Guidance Regarding Use of Reference-Based Pricing under ACA
HHS and Treasury (collectively, the “Agencies”) issued joint FAQs regarding the reasonableness of a group health plan’s use of reference-based pricing for purposes of compliance with the Affordable Care Act’s (ACA’s) maximum out-of-pocket limits. Non-grandfathered self-insured and large group insurance market group health plans are subject to annual maximum out-of-pocket limitations ($6,600 for self-only coverage and $13,200 for coverage other than self-only for 2015); only costs paid to in-network providers are required to be counted towards the annual out-of-pocket maximum amounts.
Many plans use reference-based pricing, under which the plan pays health providers a fixed dollar amount for a particular procedure. Reference-based pricing is designed to encourage plans to negotiate treatments with high-quality providers for reduced costs. However, in the guidance, the Departments expressed concern that reference-based pricing could also be used as a subterfuge to impose otherwise prohibited limitations on coverage for participants without ensuring access to quality care and an adequate network of providers. Accordingly, the Departments articulated the following general standards that will be used to evaluate the reasonableness of a plan’s use of reference-based pricing pending the issuance of more detailed guidance in the future: (1) the type of service involved and the ability of the participant to choose the provider in advance for that type of service; (2) the number of providers available that accept the reference-based price as full payment; (3) the plan’s standards to ensure quality of care; (4) the accessibility of the plan’s exceptions process; and (5) level of disclosure to participants regarding the plan’s reference-based pricing.