Implementation FAQs Address Out-of-Pocket Maximums, Preventive Services, Health FSA Carryovers, and More
The DOL, IRS, and HHS have jointly issued FAQs Part XIX, addressing implementation of a variety of health care reform provisions. Here are highlights:
- Out-of-Pocket Maximums. Q/As-2 through -4 address the extent to which certain items must be counted toward the annual limit on out-of-pocket maximums for essential health benefits (EHB), generally applicable to non-grandfathered group health plans and health insurance coverage for plan years beginning on or after January 1, 2014.
- Out-of-Network Spending. Building on a prior FAQ (under which a plan with network providers may, but is not required to, count out-of-network spending toward the plan’s out-of-pocket maximum; see our article), Q/A-2 states that a plan that chooses to count out-of-network spending may use any reasonable method. For example, a plan may count amounts that participants pay toward the usual, customary, and reasonable amount (UCR) for a service, without counting amounts paid in excess of UCR (i.e., balance billing).
- Higher Cost-Sharing for Brand-Name Drugs. Q/A-3 provides that if a self-insured or large group health plan defines EHB to include (where medically appropriate and available) only generic prescription drugs, but also offers a separate option to purchase the brand-name drug with higher cost-sharing, then (assuming appropriate disclosure) the difference in cost-sharing need not be counted toward the out-of-pocket maximum. (Q/As-3 and -4 note that non-grandfathered individual insurance coverage and insured small group health plans may be subject to additional requirements because they must provide the EHB package; see our article.)
- Reference-Based Pricing. Q/A-4 addresses reference-based pricing structures, under which the plan pays a fixed amount for a particular procedure, which certain providers accept as payment in full. The agencies invite comments (by August 1, 2014) on how the out-of-pocket maximum limit should apply in these circumstances. Until further guidance, a plan may treat providers that accept the reference amount as in-network providers (i.e., balance billing paid to other providers need not be counted toward the out-of-pocket maximum), so long as the plan uses a reasonable method to ensure adequate access to quality providers.
- Coverage of Tobacco Counseling as Preventive Services. Q/A-5 addresses the requirement to cover tobacco counseling and interventions as preventive services (i.e., without cost-sharing when provided in-network). Because the underlying task force recommendation does not specify a frequency, method, or setting for these services, a plan or insurer may use reasonable medical management techniques to determine any coverage limitations (see our article). For example, a plan or insurer will be in compliance if it covers (a) screening for tobacco use; and (b) for tobacco users, at least two “cessation attempts” (as defined in the Q/A) per year.
- Health FSA Carryover and Excepted Benefits. Q/A-6 coordinates the excepted benefit requirements for health FSAs with IRS guidance allowing health FSAs to offer carryovers of up to $500 (see our article). The Q/A provides that carryover amounts are not taken into account in determining whether a health FSA satisfies the maximum benefit condition of the excepted benefit requirements. [EBIA Comment: This FAQ resolves an issue left open by the initial carryover guidance and is welcome news. And footnote 14 in this portion of the FAQs caught our attention, because it seems to suggest that a nonexcepted health FSA could be integrated with other coverage to comply with health care reform’s preventive services requirements. It is difficult to reconcile the footnote with agency guidance issued last year, which notes that nonexcepted health FSAs generally will fail to meet the preventive services requirements (see our article). Clarification from the agencies would be helpful.]
- Summary of Benefits and Coverage (SBC). Q/A-7 provides that, until further guidance is issued, the SBC template and sample completed SBC made available in April 2013 (see our article) may be used after the second year of applicability (i.e., for plan years beginning on or after January 1, 2015). And Q/A-8 extends, until further guidance is issued, certain previously issued enforcement and transition relief relating to various aspects of SBC compliance.