On August 31, 2017, the U.S. District Court for the District of Columbia held that HHS, the Department of Labor and the Department of Treasury (the Departments) failed to adequately address commenters’ concerns and proposed alternatives in an Interim Final Rule adopting a regulation that set the minimum payment level by a health plan for out-of-network emergency services provided under EMTALA.
The ACA requires that if a health plan provides or covers any benefits with respect to services in an emergency department of a hospital, and such services are provided to an enrollee by an out-of-network provider, the “cost-sharing requirement (expressed as a copayment amount or coinsurance rate) [must be] the same requirement that would apply if such services were provided in-network. ” 42 U.S.C. § 300gg-19a(b). The Departments issued an Interim Final Rule on June 28, 2010, implementing this provision. In the Interim Final Rule, the Departments reasoned that it would defeat the purpose of the ACA provision if patients’ coinsurance or copayment amounts were limited to in-network rates but the patients still faced high payments for emergency services in States where providers are permitted to balance bill if the health plans’ payments to providers were unreasonably low.
Thus, in order to ensure that a provider is paid a reasonable amount before a patient becomes responsible for the balance of the provider’s charge after the health plan’s payment, the Interim Final Rule adopted what is known as the “greatest of three” regulation. The regulation provides that a health plan satisfies the ACA copayment or coinsurance requirement if it provides benefits for out-of-network emergency services at the greatest of the following three amounts: (i) the amount negotiated with in-network providers; (ii) 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 usual, customary, and reasonable charges) but substituting the in-network cost-sharing provisions for the out-of-network cost-sharing provisions; or (iii) the amount that would be paid under Medicare. 45 C.F.R. § 147138(b)(3).
Plaintiffs submitted comments to the Departments with respect to the Interim Final Rule expressing concerns with the second option. They noted that the second option was not transparent and could be manipulated by health plans. They instead suggested an alternative database developed by a third party.
The Departments published a Final Rule in November 2015. See 80 Fed. Reg. 72192 (Nov. 18, 2015). In the Final Rule, the Departments declined to change their approach to the second option, responding to Plaintiffs’ comments as follows: “Some commenters expressed concern about the level of payment for out-of-network emergency services and urged the Departments to require plans and issuers to use a transparent database to determine out-of-network amounts. The Departments believe that this concern is addressed by our requirement that the amount be the greatest of the three amounts specified in [the GOT regulation]. ” 80 Fed. Reg. at 72213.
Plaintiffs filed suit alleging that the Final Rule was invalid because (i) the Departments did not respond meaningfully to Plaintiffs’ concerns and (ii) it does not ensure a reasonable payment for out-of-network services.
The District Court agreed with Plaintiffs “that the Departments acted arbitrarily and capriciously by failing to seriously respond to comments and proposed alternatives submitted by Plaintiff and others regarding perceived problems with the GOT regulation. ” Am. College of Emergency Physicians v Price, No. 1:16-cv-913, 7 (D.D.C. 2017). The District Court reasoned that although an agency does not need to address every comment made, the Department’s response in the Final Rule did not seriously respond to the actual concerns raised about the particular rates and ignored the proposed alternative of using a third-party database. Id. at 7. Accordingly, the District Court remanded the matter to the Departments to sufficiently address the comments but did not vacate the regulation pending consideration. Instead, the Court instructed the Departments that they are free to supplement their explanation and may reach the same or different conclusion as long as they respond in a “reasoned manner that ‘enable[s] [the Court] to see what major issues of policy were ventilated … and why the agency reacted to them as it did. ’” Id. at 7 (citing Auto. Parts & Accessories Ass’n, v. Boyd, 407 F.2d 330 , 338 (D.C. Cir. 1968)). Because the District Court remanded the matter to the Departments for additional explanation, it did not decide whether the Final Rule was invalid for failing to ensure a reasonable payment for out-of-network services.
The court’s decision is available here.
