In response to litigation involving the American College of Emergency Physicians (ACEP), the DOL, HHS, and Treasury (Departments) have clarified final regulations addressing their reasons for a method of establishing minimum payment amounts for out-of-network emergency services under the Affordable Care Act (ACA).

The ACA added certain patient protection requirements, which include rules that apply if a group health plan or insurer provides benefits for hospital emergency services (see Practice Notes, Patient Protections and Clinical Trials Under the ACA: Patient Protections for Coverage of Emergency Services and Affordable Care Act (ACA) Overview). These rules and other ACA requirements were the topic of final regulations issued by the Departments in November 2015 (80 Fed. Reg. 72192 (Nov. 18, 2015); see Legal Update, ACA Final Rules Expand Claims Procedure Rules and More). Under the patient protections, non-grandfathered health plans and health insurers must limit cost-sharing for out-of-network emergency services and pay a minimum amount for out-of-network services (see Practice Note, Grandfathered Health Plans Under the ACA).

The patient protection rules require plans to apply the same cost-sharing requirement (expressed in terms of copayments and coinsurance) for emergency services provided out-of-network as for emergency services provided in-network. However, the ACA does not specify how much an out-of-network health provider of emergency services must be paid by the plan for performing its services. If an out-of-network provider's charges exceed the amount allowed under the plan, the provider may "balance bill" a participant for the amount of the provider's charge that exceeds the allowed amount. Balance billing refers to the provider practice of billing participants for the difference between:

Under ACA implementing regulations, a reasonable amount must be paid (using an objective standard) before the participant is charged for the balance-billed amount. The Departments defined this amount using a "greatest of three" (GOT) regulation that required a plan or coverage to provide benefits for out-of-network emergency services in an amount equal to the greatest of the following three amounts:

(See Practice Note, Patient Protections and Clinical Trials Under the ACA: Minimum Payment Standards.)

Before the Departments' GOT regulation was final, the American College of Emergency Physicians (ACEP) submitted comments:

The Departments finalized the emergency services regulations in November 2015, and ACEP sued the Departments in May 2016. ACEP argued that:

In August 2017, a district court concluded that the Departments had not sufficiently responded to the comments of ACEP and others in finalizing its November 2015 regulations (Am. Coll. of Emergency Physicians v. Price, 264 F. Supp. 3d 89 (D.D.C. 2017)). Although the court did not vacate the November 2015 regulations, it remanded the matter to the Departments to provide a more thorough response.

The Departments have now provided additional written clarification in response to the district court's order. The clarification responds directly to ACEP's initial comments concerning payments for out-of-network emergency services under the Departments' November 2015 final regulations. The Departments concluded that their approach under the regulations provided a reasonable methodology for determining payments for out-of-network emergency services, including in terms of rate transparency.

According to the Departments, adopting ACEP's proposal to develop a new or existing database to establish UCR amounts would essentially require them to establish specific provider reimbursement rates for plans and health insurers – an area that historically has been reserved for the states. The Departments also indicated that creating and maintaining such a database would:

The Departments believe that their GOT regulation:

Regarding transparency, the Departments noted that health plans subject to the Employee Retirement Income Security Act of 1974 (ERISA) must disclose how they calculate payments under the GOT regulation. This includes:

Additional disclosures regarding out-of-network payment amounts may be required from ERISA plans in the claims procedure context (see Practice Note, Internal Claims and Appeals Under the ACA).

For these reasons, the Departments concluded that the GOT regulation, as reflected in the November 2015 final regulations, provided a practical and effective approach to determining required minimum payment amounts for out-of-network emergency services. As a result, the Departments declined to adopt ACEP's suggestions.

For the moment, at least, the Departments' response on remand in the ACEP litigation suggests that plans and insurers should continue to apply the GOT regulation under the November 2015 final rules in calculating minimum payment rates for out-of-network emergency services. As a reminder, the Departments also take the view that plans or insurers must disclose how they calculate amounts under the minimum payment standards. This includes the method the plan or insurer uses to determine payments for out-of-network services (for example, the UCR amount). According to the Departments, these documents are considered "instruments under which the plan is established or operated," meaning that they must be provided to participants within 30 days of request (see Practice Note, ERISA Litigation: Penalties for Failing to Provide Documents: Other Instruments Under Which the Plan Is Established or Operated: Guidance on Usual and Customary Fee Schedules Reflects DOL's Broad Interpretation).