ACA Prohibits Discrimination Against Licensed Providers

Written by on August 29, 2014 in Law & Finance - No comments

One of the more obscure provisions of the Affordable Care Act says that a group health plan may not discriminate against “any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.”  What on earth does this provision mean?  Apparently not even the federal government is sure.

ACA Federalizes State Mandated-Provider Laws

Before 2014, many self-insured group health plans and health insurers excluded coverage for services provided by certain categories of health care providers.  The excluded services often were rendered by providers who did not have advanced medical degrees (an M.D. or equivalent), but who had professional training and were licensed by the state to perform certain services.  For example, a health plan might cover the cost of a baby’s delivery by an obstetrician, but not by a nurse-midwife; it might cover the cost of treatment for back pain by an orthopedist, but not by a chiropractor or acupuncturist; it might cover the cost of treatment for glaucoma by an ophthalmologist, but not by an optometrist; and so on.

Nearly every state enacted “mandated provider” laws, which required group health plans to cover the services of particular groups of licensed providers who were not physicians.  The providers covered by these laws varied from state to state, but often included chiropractors, optometrists, physical therapists, psychologists, registered nurses, and social workers.  More recent laws extended this protection to practitioners of alternative medicine, such as acupuncturists, massage therapists, and naturopaths.

BusinessPeopleWEBFrom the point of view of the providers, however, the state mandated-provider laws had two significant shortcomings.  First, the laws could not reach self-insured group health plans, which remained free to exclude the providers’ services from coverage.  Second, even in the case of insured plans, it was not clear that the mandated-provider laws were saved from ERISA preemption as laws regulating insurance.  When courts were asked to resolve this question, they reached conflicting conclusions.

ACA addressed this issue by creating a sweeping federal law that requires all non-grandfathered group health plans and insurers that provide coverage for a particular service to extend the coverage to any category of provider licensed to provide the service.  ACA’s mandated-provider provision became effective on January 1, 2014; but employers are still struggling to understand its effect on their group health plans.

The ACA Provision Is Not an “Any-Willing-Provider” Law

One thing, at least, is clear: the ACA provision does not require self-insured group health plans to admit any willing provider to their networks.  In the 1980s, when group health plans began to establish networks of preferred providers in an effort to control costs, many states responded by enacting “any-willing-provider” laws.  Under these laws, an insurance company was required to admit to its network any provider in the region that was willing to meet the conditions for participating in the network.

These laws diluted the effectiveness of the networks: providers were less willing to agree to favorable pricing and performance guarantees when the sponsors could not guarantee that their networks would direct plan participants to a limited number of providers.  The question whether these laws were preempted by ERISA was litigated all the way to the Supreme Court, which decided in Kentucky Association of Health Plans, Inc. v. Miller that state any-willing-provider laws were saved from preemption as they applied to insured plans and HMOs.

The Supreme Court decision did not apply to self-insured health plans, however, which continued to establish preferred-provider networks.  The ACA provision makes clear that it does not alter the status of any-willing-provider laws for insured or self-insured plans.

Senate Committee Disagrees With Federal Agencies’ Interpretation

If the ACA provision does not require self-insured plans to cover the services of any willing provider, what does it require?  If a group health plan covers a particular condition, must it cover treatment offered by any provider a state chooses to license, regardless of whether the treatment is evidence-based or generally considered to be safe and effective? The federal regulatory agencies dodged this question.  In April 2013, the agencies declared in an answer to a frequently-asked question that the ACA provision was self-implementing and that the agencies did not intend to issue regulations interpreting the provider non-discrimination requirement in the near future.

The FAQ does offer a few helpful observations, however.  It says that the ACA provision “does not require plans or issuers to accept all types of providers into a network.”  The FAQ also elaborates on a statement in the statute concerning reimbursement rates.  The statute says that the ACA provision does not prevent a group health plan from establishing different reimbursement rates “based on quality or performance measures.”  The FAQ arguably expands this flexibility: it states that the provision “does not govern provider reimbursement rates, which may be subject to quality, performance, or market standards and considerations.”

The Senate Committee on Appropriations issued a report several months later repudiating the agencies’ interpretation of the provider non-discrimination provision.  The report observes that the FAQ allows health plans and issuers “to exclude from participation whole categories of providers operating under a State license or certification.”  The report also notes that the FAQ “allows discrimination in reimbursement rates based on broad ‘market considerations’ rather than the more limited exception cited in the law for performance and quality measures.”  The report asserts that the ACA non-discrimination provision “was intended to prohibit exactly these types of discrimination.”

The Senate committee report directed the agencies “to correct the FAQ to reflect the law and congressional intent within 30 days of enactment” of the appropriations bill.  In response, the agencies issued a request for information earlier this year regarding the interpretation of the provider non-discrimination provision.  The RFI notes the Senate committee’s concerns, but it does not modify the FAQ or provide additional guidance concerning the meaning of the non-discrimination provision.

So Where Does That Leave Employer Group Health Plans?

Until the agencies issue more guidance, employers are expected to adopt a reasonable, good-faith interpretation of the statutory language.  The statements in the Senate report do not have the force of law, and a subsequent Congress’s views on what a prior Congress intended generally receive little deference.  Accordingly, the interpretive statements in the FAQ are still in effect, notwithstanding the criticism directed at them in the Senate report.  It seems unlikely that the regulatory agencies will bring an enforcement action or seek to impose a penalty based on exclusions or reimbursement limitations that are permitted under the FAQ (assuming that a plan sponsor can divine which exclusions or limitations are permitted under the FAQ).

Employers should be cautious about relying on the FAQ, however.  If a group health plan participant makes a claim for coverage of a service by a licensed provider, an independent review organization or a court will not necessarily adopt the interpretation suggested by the agencies in informal sub-regulatory guidance.  Courts generally follow an agency’s informal interpretation only to the extent that they find it persuasive and consistent with the statute.  Accordingly, non-grandfathered group health plans will run some risk if they establish networks that consist exclusively or predominantly of physicians, or if they cover treatments and services performed by some providers but not by others.

By Amy Moore
Covington & Burling LLP

Source: http://www.insidecompensation.com/2014/07/31/aca-prohibits-discrimination-against-licensed-providers/#more-2091

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