Departments clarify reasonableness of GOT regulation for out-of-network ER services

The Departments of Labor, Health and Human Services, and the Treasury (the Departments) have issued a court-requested clarification to provide a more thorough explanation of their decision not to adopt recommendations made by the American College of Emergency Physicians (ACEP) and certain other commenters in a November 2015 final rule (80 FR 72192), which provided, in part, a methodology to determine appropriate payments by group health plans and health insurance issuers for out-of-network emergency services. The clarification states the Departments’ belief that the methodology they set forth in the 2015 final rule was reasonable and transparent and that the ACEP’s proposal requiring the development of a database to set usual, customary, and reasonable (UCR) payment amounts would require the Departments to go beyond their statutory authority and intrude on state authority and group health plan and health insurance issuer discretion.

The Departments also pointed out their belief that even if they were prepared to extend their authority, and establish and maintain a database, the monitoring of the database would be too costly and time-consuming. Further, they believe there is no indication that such a database would provide a better method for determining UCR amounts than the methods group health plans and health insurance issuers currently use.


Section 10101 of the Patient Protection and Affordable Care Act (ACA) reorganized, amended, and added to the provisions of part A of title XXVII of the Public Health Service Act (PHS Act). Section 2719A of the PHSA, entitled “Patient Protections,” which requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance to cover emergency services even if the provider is not one of the plans participating providers.

In addition, it requires non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage to apply the same cost-sharing requirement (expressed as copayments and coinsurance) for emergency services provided out-of-network as emergency services provided in-network.

However, the statute does not expressly address how much the out-of-network provider of emergency services must be paid for performing such services by the non-grandfathered group health plan or health insurance issuer offering non-grandfathered group or individual health insurance coverage.

Interim final rule.

On June 28, 2010, the Departments published an interim final rule (June 2010 IFR) (75 FR 37188) stating that because section 2719A of the PHSA does not require plans or issuers to cover balance billing amounts, and does not prohibit balance billing, even where the protections in the statute apply, patients may be subject to balance billing. To avoid the circumvention of the patient protections of section 2719A of the PHSA, and avoid excessive balance billing to beneficiaries, the June 2010 IFR required that a reasonable amount be paid for services by some objective standard.

Accordingly, the June 2010 IFR considered three amounts: the in-network rate, the out-of-network rate, and the Medicare rate. Specifically, a plan or issuer satisfies the copayment and coinsurance limitations in the statute if it provides benefits for out-of-network emergency services in an amount equal to the greatest of three possible amounts:

  1. The amount negotiated with in-network providers for the emergency service furnished;
  2. The amount for the emergency service calculated using the same method the plan generally uses to determine payments for out-of-network services (such as the UCR charges) but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or
  3. The amount that would be paid under Medicare for the emergency service.

Each of these three amounts is calculated excluding any in-network copayment or coinsurance imposed with respect to the participant, beneficiary, or enrollee. These payment options are referred to the “Greatest of Three” (GOT) regulation.

During the comment period for the June 2010 IFR, some commenters were in favor of the GOT regulation while others expressed concerns. Several commenters, including ACEP, objected to the second prong of the GOT regulation, which relates to the method the plan generally uses to determine payments for out-of-network services, such as the UCR amount.

Final rule.

On November 18, 2015, the Departments finalized the June 2010 IFR regulation, including the GOT regulation (80 FR 72192), and incorporated a clarification that had been issued in a sub-regulatory Frequently Asked Questions (FAQs) guidance.

In the FAQs guidance, in Question and Answer number 4, the Departments clarified that a group health plan or health insurance issuer of group or individual health insurance coverage is required to disclose how it calculates the amounts under the GOT regulation, including the UCR amount. The FAQ guidance and the final regulations also provide that if state law prohibits balance billing, or in cases in which a group health plan or health insurance issuer is contractually responsible for balance billing amounts, plans and issuers are not required to satisfy the GOT regulation, but may not impose any copayment or coinsurance requirement for out-of-network emergency services that is higher than the copayment or coinsurance requirement that would apply if the services were provided in-network.

ACEP lawsuit.

On May 12, 2016, the American College of Emergency Physicians (ACEP) filed a lawsuit against the Departments, asserting that the final GOT regulation should be invalidated because it does not ensure a reasonable payment for out-of-network emergency services and that the Departments did not respond meaningfully to ACEP’s comments about purported deficiencies in the regulation.

On August 31, 2017, the U.S. District Court for the District of Columbia issued a memorandum opinion that granted in part and denied in part without prejudice ACEP’s motion for summary judgment, and remanded the case to the Departments for further explanation of the November 2015 final rule. The court concluded that the Departments did not adequately respond to comments and proposed alternatives submitted by ACEP and others regarding perceived problems with the GOT regulation.

Departments’ response.

The Departments’ clarification provided the additional consideration required by the court’s remand order. Specifically, the Departments more fully responded to the ACEP’s written comment dated August 3, 2010, in reference to the June 2010 IFR. In sum, however, the Departments declined to adopt the suggestions of ACEP and other commenters that made similar suggestions regarding the GOT regulation.

SOURCE: 83 FR 19431, May 3, 2018.
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