Clarification Issued: ACA Out-of-Network Emergency Services


The Internal Revenue Service, Employee Benefits Security Administration and the Department of Health and Human Services (collectively, the Departments) recently issued a “Notice of Clarification” in response to a court order requesting the Department’s justification for adopting 2015 regulations that implemented provisions under the Affordable Care Act (“ACA”) related to non-grandfathered health insurance plans. These regulations address the amount of group health plans and health insurers receive for out-of-network emergency services.

Public Health Service Act §2719A

Public Health Service Act (“PHSA”) §2719A, introduced by the ACA, provides that a non-grandfathered health insurance plan is permitted to provide out-of-network emergency service benefits in an amount equal to at least one of the following (commonly referred to as the “Greatest of Three”):

  1. The median amount negotiated with in-network providers for the emergency service provided;
  2. The amount paid for the service according to the generally utilized method for out-of-network services (such as the Usual, Customary, and Reasonable amount); or
  3. The amount that would be otherwise paid to Medicare for the emergency service.

Additionally, the non-grandfathered health insurance plan is required to disclose the process used to calculate the amount under the minimum payment standards.

American College of Emergency Physicians v. Thomas E. Price, M.D.

The American College of Emergency Physicians (“ACEP”) filed a complaint with the District Court citing concerns regarding the second item outlined above in the Greatest of Three determination expressing its apprehension regarding the ability to objectively determine what constitutes a fair amount that should be paid by insurers for out-of-network emergency services. Because of this, ACEP argued that insurers have the ability to pay unfair amounts, moving the cost-sharing burden to other patients, which is a violation of the ACA.

ACEP called for more transparency when determining the amount of out-of-network emergency services arguing that insurance companies should be required to utilize an objective and transparent database such as Fair Health; an independent database used to determine payments for out-of-network emergency services, for calculating out-of-network emergency care amounts.

Court Order and Notice of Clarification

The Court determined that it would not be appropriate to remove the regulations. Instead, a Court Order was issued requiring a response from the Departments.

The Departments, in responding to the Court Order requiring a response, issued a “Notice of Clarification” stating reasons why they believe the current method utilized to determine out-of-network emergency service care costs for insurance companies is objective, appropriate and sufficient. The Departments also proposed, in the Notice of Clarification, that creating such a database, as the ACEP recommended, would be an intrusion on state authority. However, if the Departments were willing to extend into the states’ authorities, the Departments claim the establishment and maintenance of such a database would be too costly and time-consuming.

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