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HB Counsel Alert – Federal Agencies Issue Clarification on ACA Emergency Services Regulations

The DOL, IRS, and HHS (the “Agencies”) issued a clarification dated April 30, 2018, of the Final Rules implementing the ACA’s patient protection provisions that apply to non-grandfathered group and individual health plans, which were originally published on November 18, 2015.




One of the patient protections included in the ACA requires applicable group health plans to cover out-of-network charges for emergency services without prior authorization and at in-network cost sharing.  A plan may not impose higher copayments or coinsurance amounts on emergency medical treatment simply because the treatment was provided by an out-of-network provider.


Interim Final Rules published on June 28, 2010, considered a non-grandfathered plan to satisfy this requirement if it pays benefits for such services in an amount equal to the greatest of three possible amounts:


  • The in-network rate,
  • The out-of-network rate, and
  • The Medicare rate.


These three possible payment amounts are colloquially referenced as the “Greater of Three” or “GOT.”


During the comment period for the Interim Final Rules, responses were mixed.  Several commenters, including the American College of Emergency Physicians (“ACEP”), objected to the second prong of the GOT, due to a lack of transparency and manipulation by insurers in the methodology most plans use to determine payments for out-of-network services, such as the usual, customary, and reasonable (“UCR”) amount.


The Final Rules issued in November of 2015 adopted the GOT regulation from the Interim Final Rules, without any substantive changes and this was challenged by ACEP in litigation on May 12, 2016.  The ACEP alleged that the final regulation was invalid because it did not ensure a reasonable payment for out-of-network emergency services and that the Agencies did not respond meaningfully to comments ACEP submitted.


On August 31, 2017, the U.S. District Court for the District of Columbia issued a memorandum opinion granting in part ACEP’s motion for summary judgment, and remanded the case to the Agencies for further explanation of the November 2015 Final Rule.  The federal court concluded that the Agencies acted arbitrarily and capriciously in adoption of the Final Rule and did not adequately respond to comments and proposed alternatives to the GOT regulation.


Agencies’ Clarification of the Final Rule


On April 30, 2018, in response to the federal court’s opinion, the Agencies issued a clarification of the final GOT regulations.


The Agencies noted the following in the clarification:


  • Patients have a right under the ACA and ERISA to obtain transparent information supporting the calculation of their benefits, and providers may access this information as the patient’s authorized representative.


  • The ACEP’s proposed independent database approach would be problematic, time-consuming, costly, and burdensome, with no evidence that it would be a better measure than UCR.


  • Clarified that it is the greater of the in-network, out-of-network, or the Medicare rate that must be paid.


The Agencies stated that:


[T]he existing GOT regulation provides a statutorily supportable, and also a more practical, and cost-effective approach for group health plans and health insurance issuers to determine the required minimum payment amounts.


The clarification made no change to the GOT regulation and health insurers and plan sponsors may continue to use the “greater of” the three prongs to calculate the payment amount for emergency medical treatment provided out-of-network.


Next Steps


The Agencies did respond to the federal court’s opinion with its clarification of the Final Rule.  However, the GOT is still subject to challenge in the ACEP federal court action.  If ACEP continues its litigation, it may be necessary for the federal court to render a judgement regarding the sufficiency of the Agencies’ clarification and this could change the standard.


We continue to monitor further developments in the case, and will provide an update if further actions occur that impact the GOT regulation.


The content herein is provided for educational and informational purposes only and does not contain legal advice.  Please contact our office if you have any questions about the impact of the Agencies’ clarification on your employee benefit plans.


Dated:  June 19, 2018