Your OOPMax, Your PBM and Your Non-Grandfathered Health Plan
Your first plan year that begins on or after January 1, 2014 will be subject to cost-sharing limitations under PPACA. All non-grandfathered plans, and by all we mean all self-insured and insured plans in the large-group market, will need to comply with annual out-of-pocket limits, referred to as OOPMaxes (Out-Of-Pocket Maximums). (See, ER-Timeline, 2014, letter g.).
The three federal agencies responsible for implementing the Affordable Care Act — HHS, DOL and IRS (the Departments of Labor, Health and Human Services and Treasury (collectively, the “Departments”) — have issued guidance in the form of answers to frequently asked questions (FAQs-ACA-12) that begins to explain how these cost-sharing limits will work in 2014.
Background – Annual Limits, OOPMaxes, 2014 and Beyond
For the plan year beginning in 2014, the annual limitation on out-of-pocket maximums (“OOPMaxes) will be the same as those that apply in 2014 to high-deductible health plans (HDHPs) combined with Health Savings Accounts (HSAs). These maximums are $6,350 for an individual and $12,700 for a family. For 2015 and beyond, the out-of-pocket maximum will be adjusted based on increases in the average per capita premium for health insurance coverage, and will no longer be linked to the out-of-pocket maximums for HDHP/HSAs.
Based on language in the Affordable Care Act and a final rule applicable to Exchange plans, it is likely that future rules will define the cost-sharing limit to include deductibles, coinsurance and copayments. Premiums, balance-billing amounts for non-network providers and spending for non-covered services would be excluded. [Accordingly, it is reasonable for Employers, Plan Sponsors, Consultants and Carriers to continue to apply these limits to the in-network coverages only].
As a result, plans could have an unlimited out-of-pocket maximum for out-of-network coverage. However, this has not been clearly stated by the Departments. It is also unclear whether the cost-sharing limits will apply only to benefits that qualify as essential health benefits under the Affordable Care Act or will apply more broadly.
Multiple Service Provider Transition Rule
The Departments recognize that employers and plan sponsors use multiple service providers to help administer benefits. For example, a plan might use a third-party administrator (TPA) to administer major medical coverage, a pharmacy benefit manager (PBM) for prescription drug coverage and a managed behavioral health organization. In order for a non-grandfathered plan to be able to comply with the annual limit on out-of-pocket maximums, the processes used by different administrators may have to be coordinated – to a degree and to an extent that they aren’t coordinating today.
The Departments announced a special transition rule for the first plan year beginning on or after January 1, 2014. The Departments will consider the annual limit on out-of-pocket maximums deemed to be met if the following two conditions are met:
- The plan complies with the requirement for its major medical coverage (e.g., excluding prescription drug coverage), and
- If the plan has an annual out-of-pocket maximum on other coverage (e.g., a separate out-of-pocket maximum applies to drug coverage), that separate out-of-pocket maximum does not exceed the allowed dollar amount.
The Departments further note that the plan must also comply with the Mental Health Parity and Addiction Equity Act (MHPAEA), which prohibits a separate out-of-pocket maximum for mental health or substance use disorder benefits. So, while coordination with your TPA/ASO medical vendor and your PBM may enjoy a brief delay, your may not delay with integration/coordination efforts between your medical and mental health/substance abuse vendors.
Implications for Non-Grandfathered Plans
Sponsors of non-grandfathered group health plans should begin to plan for the new annual limitation on out-of-pocket maximums for the 2014 plan year. This would include:
- Identifying current out-of-pocket maximums, and whether they apply on an in-network only or on both an in-network and out-of-network basis,
- Determining whether there are charges that are not counted toward the out-of-pocket maximum, but will now need to be considered, including benefits provided by service provider (e.g. PBM), and
- Discussing the new annual limit on out-of-pocket maximums with service providers to determine how they are addressing these new rules.
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