Does Your Plan Use Reference Based Pricing?
If so, you should review the most recent ACA FAQ issued by the DOL. For those not familiar, reference-based pricing is a structure where the plan pays only a fixed dollar amount (or “reference price”) for a particular procedure. For example, a plan with a reference-based pricing structure may pay $20,000 for a knee replacement. If a participant uses a provider that accepts the reference price as payment in full, then the participant pays nothing for the procedure. But if the participant uses a provider that charges more than the reference price, the participant is responsible for the difference.
The ACA issue with reference-based pricing is whether the plan must count the difference paid, if any, towards the plan’s out-of-pocket maximum to satisfy the ACA rules on cost-sharing. Generally, plans don’ t have to count amounts that are spent on out-of-network services towards the out-of-pocket maximum. Prior DOL guidance permitted the plan to treat providers that accepted the reference-amount as payment in full as in-network providers so long as the plan “uses a reasonable method to ensure adequate access to quality providers.” The result of this treatment is that if a participant goes to a provider that doesn’t accept the reference price as payment in full, the provider will be treated as an out-of-network provider and the amount the participant pays to the provider won’t count towards the participant’s maximum out-of-pocket.
The new FAQ issued by the DOL provides guidance on the facts and circumstances that they will consider when evaluating whether a plan’s reference-based pricing design is using a reasonable method to ensure that it provides adequate access to quality providers. All plans that use reference-based pricing should review this FAQ to determine whether amounts charged over the reference price can be treated as out-of-network costs.