Limitations on Cost-Sharing Under the Affordable Care Act
Public Health Service (PHS) Act section 2707(b), as added by the Affordable Care Act, provides that a non-grandfathered group health plan shall ensure that any annual cost-sharing imposed under the plan does not exceed the limitations provided for under section 1302(c)(1) of the Affordable Care Act. Section 1302(c)(1) limits an enrollee’s out-of-pocket costs.(1)
For plan or policy years beginning in 2015, the annual limitation on an individual’s maximum out-of-pocket (MOOP) costs in effect under Affordable Care Act section 1302(c)(1) is $6,600 for self-only coverage and $13,200 for coverage other than self-only coverage.(2) Beginning with the 2015 plan or policy year and for plan or policy years thereafter, the annual limitation on out-of-pocket costs is increased by the premium adjustment percentage described under Affordable Care Act section 1302(c)(4).
Previous FAQs provided guidance on the MOOP requirements under PHS Act section 2707(b).(3) The FAQs clarified that if a plan includes a network of providers, the plan may, but is not required to, count an individual’s out-of-pocket spending for out-of-network items and services toward the annual limitation on cost sharing. The FAQs also addressed reference-based pricing in non-grandfathered large group insurance market and self-insured group health plans,(4) under which the plan pays a fixed amount for a particular procedure (for example, a knee replacement), which certain providers will accept as payment in full.(5) In the FAQ, the Departments explained that reference-based pricing is designed to encourage plans to negotiate treatments with high-quality providers at reduced costs. At the same time, the Departments expressed concerns that such a pricing structure could be a subterfuge for the imposition of otherwise prohibited limitations on coverage, without ensuring access to quality care and an adequate network of providers.
The FAQ further stated that, until guidance was issued and effective, with respect to a large group market plan or self-insured group health plan that utilizes a reference-based pricing design, the Departments would not consider a plan or issuer as failing to comply with the MOOP requirements of PHS Act section 2707(b) because the plan or issuer treats providers that accept the reference amount as the only in-network providers, as long as the plan or issuer uses a reasonable method to ensure that it offers adequate access to quality providers. The FAQ also solicited comments on the application of the MOOP requirements to such benefit designs, indicating a particular interest in standards that plans or issuers using reference-based pricing should be required to meet to ensure that individuals have meaningful access to medically appropriate, quality care.
The Departments received a range of comments and questions on the application of the MOOP requirements to various provider network benefit designs. Many comments suggested that plans and issuers should be permitted to limit counting an individual’s out-of-pocket costs exceeding the reference price towards the MOOP only with respect to certain types of services (such as non-emergency services or routine procedures). Other comments suggested network adequacy and quality standards or procedures that a plan or issuer should be required to meet if the plan or issuer wants to utilize a network design under which less-than-full credit is given against the MOOP for non-preferred providers. Many of these comments also suggested that plans establish an exceptions process in certain circumstances to allow an enrollee’s full cost sharing for non-reference based providers to count toward the MOOP. Additional comments addressed disclosure issues, to ensure that individuals had timely and adequate information to make informed treatment decisions.
Based on comments received, set forth below is an additional FAQ regarding the MOOP requirements. This FAQ addresses only group health plans’ and group health insurance issuers’ obligations under section 2707(b) of the PHS Act. For non-grandfathered health plans in the individual and small group markets that must provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, additional requirements apply.
Compliance with section 2707(b) of the PHS Act is not determinative of compliance with any other provision of law, including PHS Act section 2713, relating to coverage of preventive services, and PHS Act section 2719A, relating to choice of a health care professional and benefits for emergency services (incorporated by reference into the Employee Retirement Income Security Act (ERISA) section 715 and Internal Revenue Code (Code) section 9815) and implementing regulations.