One of the provisions of the Patient Protection and Affordable Care Act that has not gotten much play, outside of the world of emergency medicine, was designed to prevent health plans that fall under this act from sticking it to patients who have a medical or traumatic emergency and are treated by an out of network provider. There are two elements to this protection: 1) a requirement that the plan set a benefit that is ‘reasonable’, and 2) that the coinsurance percentage and any copay amount that might apply to emergency care be no greater than would apply if the patient had been treated by an in-network provider. This is because, in an emergency, patients may not be able to select an in-network provider to treat them, even if they go to an in-network hospital.
Although the second protection is fairly straight forward; the first protection is a bit tricky, because one person’s ‘reasonable’ is another’s ‘outlandish’ and someone else’s ‘grossly inadequate’. CMS attempted to define ‘reasonable’ for this provision in the regs by requiring plans to determine which of the following three standard results in the greatest benefit: the median of the plan’s contracting rates with similar payers; the plan’s usual payment rate for out-of-network providers; and the Medicare rate. Whichever standard resulted in the highest amount would determine the allowable benefit for this out-of-network emergency care service.
There are many problems with this ‘greatest of three’ protection. The rates a plan pays to contracted physicians are almost always protected by non-disclosure agreements between the plan and the contracting in-network provider. These rates are not published, and therefore are not available to the public, to providers, or to insurance regulators. Also, contracted rates are discounted, but the real value of a discounted service is equal to the contracted rate PLUS the value of the considerations exchanged for the discount; so contracted rates per-se are not really a reflection of the full market value of the service. The plan’s usual benefit for out-of-network services is determined at the whim of the plan, and often has no relationship to the commercial market value of the service. Medicare rates are, of course, a reflection of a government subsidized, budget driven quasi-charity program for seniors, and often don’t even cover the cost of the service. In addition, there is no way to tell which of these three standards were used by the plan to determine the allowable benefit. Therefore, this ‘greatest of three standards’ approach is black-box, non-transparent, arbitrary, unrelated to fair value, and unenforceable. It wouldn’t surprise me if this language was suggested to CMS by the health insurance industry – they love unenforceable regulations.
Only a couple of years ago, most plans determined this benefit amount based on the lesser of the provider’s charge or the 80th percentile of usual and customary charges (the amount that eight out of ten provider’s charge ranked from lowest to highest charge). Many plans have since cut these benefits in half, and its doubtful they are compliant with these regulations; but there is really no way of knowing. The PPACA regulations don’t appear to offer much in the way of patient protection when it comes to health plan benefit determinations for out-of-network emergency care.