On May 26, the Departments of Health and Human Services (“HHS”), Labor (“DOL”) and Treasury (collectively, the “Departments”) issued Part XXVII of their FAQs about Affordable Care Act implementation. This latest FAQ provides additional guidance regarding limitations on cost sharing under the ACA, as well as further information and guidance regarding the ACA’s “provider non-discrimination” provision.
With regard to the ACA’s limitations on cost sharing (i.e., the maximum annual limitation on cost sharing/out-of-pocket costs), the FAQ notes that the maximum annual limitation will rise in 2016 to $6,850 for self-only coverage and $13,700 for other than self-only coverage (up from the 2015 amounts of $6,600 for self-only coverage and $13,200 for other than self-only coverage). The FAQ then notes that HHS, in the final HHS Notice of Benefit and Payment Parameters for 2016 (“2016 Payment Notice”), had clarified that the self-only maximum annual limitation on cost sharing applies to each individual, regardless of whether the individual is enrolled in self-only coverage or in coverage other than self-only.
Notably, the FAQ then goes on to expand this “clarification” from the 2016 Payment Notice to all non-grandfathered group health plans, including non-grandfathered self-insured and large group health plans. As a result, for all non-grandfathered group health plans, the self-only limit applies on an individual-by-individual basis, whether the individual is enrolled in self-only, family or some other variant of coverage. Hence, for example, if an employee enrolled in family coverage in 2015 incurs $10,000 in cost sharing, that individual would be limited to the self-only cost-sharing limit for 2015 (i.e., $6,600), and “the plan is required to bear the difference” between the $10,000 in actual cost sharing and the applicable limit – in this case, $3,400. The FAQ is unclear as to how a plan will “bear the difference” in such a situation, and hence there is a lack of certainty as to whether this would involve separately tracking (and limiting) each individual’s cost sharing against the overall self-only limit and/or refunding directly to the individual the “difference.” The FAQs make clear that this interpretation applies to all non-grandfathered group health plans (including high deductible health plans) and is to be applied prospectively, for plan or policy years that begin in or after 2016.
With regard to the ACA’s “provider non-discrimination” provision, the FAQ’s guidance is in response to a previous FAQ (Part XV, issued April 29, 2013), and the reaction that this previous FAQ caused in this area. The prior FAQ addressed section 2706(a) of the Public Health Service Act (“PHSA”) (i.e., the ACA’s provider non-discrimination provision), which requires all non-grandfathered group health plans and insurers that provide coverage for a particular service to extend that coverage to any category of provider licensed to provide the service. This ACA provision, which became effective on January 1, 2014, by its terms, does not require that any self-insured group health plans admit any willing provider to their networks. The prior FAQ stated that PHSA section 2706(a) was self-implementing and that the Departments did not intend to issue regulations interpreting this requirement in the near future. Furthermore, whereas the statutory language says that it does not prevent a group health plan from establishing different reimbursement rates “based on quality or performance measures,” the FAQ arguably expands this notion by stating that this provision “does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.”
Several months after the prior FAQ was issued, the Senate Committee on Appropriations issued a report which repudiated the Departments’ interpretation of the provider non-discrimination provision (particularly what the report described as the FAQ “allow[ing] discrimination in reimbursement rates based on broad ‘market considerations” rather than the more limited exception cited in the law for performance and quality measures”), and directed the Departments to correct the FAQ. In response, the Departments issued a request for information on the provider non-discrimination provision, and have now followed up with the current FAQ.
In the current FAQ, the Departments declared that they are “restating” their current enforcement approach regarding the provider non-discrimination provision, and stated that they would not, until further guidance is issued, take any enforcement action against a plan or issuer with regard to this provision “as long as the plan or issuer is using a good faith, reasonable interpretation of the statutory provision.” They furthermore stated that the provisions of the prior FAQ (Part XV) pertaining to provider non-discrimination are “superseded” by this FAQ and will no longer apply. Hence, the Departments have not only removed the interpretive provisions that caused concerns for the Senate Committee on Appropriations (by removing all such interpretations and allowing plans and issues to interpret the provider non-discrimination provision on their own, on a “good faith” basis), they have also signaled an apparent intent to issue more guidance in this area.