FAQS ABOUT AFFORDABLE CARE ACT 
IMPLEMENTATION (PART XXI)  
 
October 10, 2014 
 
Set out below is an additional Frequently Asked Question (FAQ) regarding implementation of 
the Affordable Care Act. This FAQ has been prepared jointly by the Departments of Labor, 
Health and Human Services (HHS), and the Treasury (collectively, the Departments). Like 
previously issued FAQs (available at http://www.dol.gov/ebsa/healthreform/ and 
http://www.cms.gov/cciio/resources/fact-sheets-and-faqs/index.html), this FAQ answers 
questions from stakeholders to help people understand the new law and benefit from it, as 
intended. 
 
Limitations on Cost-Sharing Under the Affordable Care Act 
Public Health Service (PHS) Act section 2707(b), as added by the Affordable Care Act, provides 
that a non-grandfathered group health plan shall ensure that any annual cost-sharing imposed 
under the plan does not exceed the limitations provided for under section 1302(c)(1) of the 
Affordable Care Act. Section 1302(c)(1) limits an enrollees out-of-pocket costs.1 
 
For plan or policy years beginning in 2015, the annual limitation on an individuals maximum 
out-of-pocket (MOOP) costs in effect under Affordable Care Act section 1302(c)(1) is $6,600 for 
self-only coverage and $13,200 for coverage other than self-only coverage.2  Beginning with the 
2015 plan or policy year and for plan or policy years thereafter, the annual limitation on out-of-
pocket costs is increased by the premium adjustment percentage described under Affordable 
Care Act section 1302(c)(4).   
 
Previous FAQs provided guidance on the MOOP requirements under PHS Act section 2707(b).3 
The FAQs clarified that if a plan includes a network of providers, the plan may, but is not 
required to, count an individuals out-of-pocket spending for out-of-network items and services 
toward the annual limitation on cost sharing.  The FAQs also addressed reference-based pricing 
in non-grandfathered large group insurance market and self-insured group health plans,4 under 
                                                            
1 This annual limitation is also applied to non-grandfathered individual market coverage through the essential health 
benefits package requirements of PHS Act section 2707(a).  On April 1, 2014, Public Law No. 113-93 was enacted.  
Section 213 of that law repeals the limitation on deductibles in the small group market that was previously required 
in this market under section 2707(b) of the PHS Act and section 1302(c)(2) of the Affordable Care Act. 
2 Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond; Final 
Rule, 79 FR 30240 (May 27, 2014). 
3 See Affordable Care Act Implementation FAQs, Part XII, Q2, available at http://www.dol.gov/ebsa/faqs/faq-
aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html; 
Affordable Care Act Implementation FAQs, Part XVIII, Q2-Q5, available at http://www.dol.gov/ebsa/faqs/faq-
aca18.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs18.html; 
Affordable Care Act Implementation FAQs, Part XIX, Q2-Q4, available at http://www.dol.gov/ebsa/faqs/faq-
aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.   
4 The FAQ stated that, for non-grandfathered health plans in the individual and small group markets that must 
provide coverage of the essential health benefit package under section 1302(a) of the Affordable Care Act, 
 
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which the plan pays a fixed amount for a particular procedure (for example, a knee replacement), 
which certain providers will accept as payment in full.5  In the FAQ, the Departments explained 
that reference-based pricing is designed to encourage plans to negotiate treatments with high-
quality providers at reduced costs.  At the same time, the Departments expressed concerns that 
such a pricing structure could be a subterfuge for the imposition of otherwise prohibited 
limitations on coverage, without ensuring access to quality care and an adequate network of 
providers.   
 
The FAQ further stated that, until guidance was issued and effective, with respect to a large 
group market plan or self-insured group health plan that utilizes a reference-based pricing design, 
the Departments would not consider a plan or issuer as failing to comply with the MOOP 
requirements of PHS Act section 2707(b) because the plan or issuer treats providers that accept 
the reference amount as the only in-network providers, as long as the plan or issuer uses a 
reasonable method to ensure that it offers adequate access to quality providers.  The FAQ also 
solicited comments on the application of the MOOP requirements to such benefit designs, 
indicating a particular interest in standards that plans or issuers using reference-based pricing 
should be required to meet to ensure that individuals have meaningful access to medically 
appropriate, quality care.   
 
The Departments received a range of comments and questions on the application of the MOOP 
requirements to various provider network benefit designs.  Many comments suggested that plans 
and issuers should be permitted to limit counting an individuals out-of-pocket costs exceeding 
the reference price towards the MOOP only with respect to certain types of services (such as 
non-emergency services or routine procedures).  Other comments suggested network adequacy 
and quality standards or procedures that a plan or issuer should be required to meet if the plan or 
issuer wants to utilize a network design under which less-than-full credit is given against the 
MOOP for non-preferred providers.  Many of these comments also suggested that plans establish 
an exceptions process in certain circumstances to allow an enrollees full cost sharing for non-
reference based providers to count toward the MOOP.  Additional comments addressed 
disclosure issues, to ensure that individuals had timely and adequate information to make 
informed treatment decisions. 
 
Based on comments received, set forth below is an additional FAQ regarding the MOOP 
requirements.  This FAQ addresses only group health plans and group health insurance issuers 
obligations under section 2707(b) of the PHS Act.  For non-grandfathered health plans in the 
individual and small group markets that must provide coverage of the essential health benefit 
package under section 1302(a) of the Affordable Care Act, additional requirements apply.  
 
Compliance with section 2707(b) of the PHS Act is not determinative of compliance with any 
other provision of law, including PHS Act section 2713, relating to coverage of preventive 
services, and PHS Act section 2719A, relating to choice of a health care professional and 
                                                                                                                                                                                                
additional requirements apply.  Grandfathered health plans are exempt from both section 1302(a) of the Affordable 
Care Act and section 2707(b) of the PHS Act.   
5 Affordable Care Act Implementation FAQs, Part XIX, Q4, available at http://www.dol.gov/ebsa/faqs/faq-
aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html. 
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benefits for emergency services (incorporated by reference into the Employee Retirement 
Income Security Act (ERISA) section 715 and Internal Revenue Code (Code) section 9815) and 
implementing regulations.  
 
Q:  Under PHS Act section 2707(b), what specific factors will the Departments consider 
when evaluating whether a non-grandfathered plan that utilizes reference-based pricing 
(or similar network design) is using a reasonable method to ensure that it provides 
adequate access to quality providers at the reference-based price? 
 
Pending issuance of future guidance, for purposes of enforcing the requirements in PHS Act 
section 2707(b), the Departments will consider all the facts and circumstances when evaluating 
whether a plans reference-based pricing design (or similar network design) that treats providers 
that accept the reference-based price as the only in-network providers and excludes or limits 
cost-sharing for services rendered by other providers is using a reasonable method to ensure 
adequate access to quality providers at the reference price, including: 
 
1)  Type of service.  Plans should have standards to ensure that the network is designed to 
enable the plan to offer benefits for services from high-quality providers at reduced costs, 
and does not function as a subterfuge for otherwise prohibited limitations on coverage.  
For this purpose: 
a.  In general, reference-based pricing that treats providers that accept the reference 
amount as the only in-network providers should apply only to those services for 
which the period between identification of the need for care and provision of the 
care is long enough for consumers to make an informed choice of provider.   
b.  Limiting or excluding cost-sharing from counting toward the MOOP with respect 
to providers who do not accept the reference-based price would not be considered 
reasonable with respect to emergency services.6 Furthermore, any provision in a 
non-grandfathered plan that involves a more restrictive network cannot be applied 
to emergency services pursuant to PHS Act section 2719A (incorporated by 
reference into ERISA section 715 and Code section 9815) and its implementing 
regulations.7   
 
2)  Reasonable access.  Plans should have procedures to ensure that an adequate number of 
providers that accept the reference price are available to participants and beneficiaries.  
For this purpose, plans are encouraged to consider network adequacy approaches 
developed by States, as well as reasonable geographic distance measures, and whether 
patient wait times are reasonable.  (Insured coverage is also subject to any applicable 
requirements under State law.) 
 
                                                            
6 For this purpose, emergency services has the same meaning as the term in the Departments interim final 
regulations related to coverage of emergency services, which is defined generally in accordance with the meaning of 
the term under the Emergency Medical Treatment and Labor Act (EMTALA), section 1867 of the Social Security  
Act. 
7 See 29 CFR 2590.715-2719A(b) and 45 CFR 147.138(b). 
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3)  Quality standards.  Plans should have procedures to ensure that an adequate number of 
providers accepting the reference price meet reasonable quality standards.   
 
4)  Exceptions process.  Plans should have an easily accessible exceptions process, allowing 
services rendered by providers that do not accept the reference price to be treated as if the 
services were provided by a provider that accepts the reference price if: 
a.  Access to a provider that accepts the reference price is unavailable (for example, 
the service cannot be obtained within a reasonable wait time or travel distance).  
b.  The quality of services with respect to a particular individual could be 
compromised with the reference price provider (for example, if co-morbidities 
present complications or patient safety issues).   
 
5)  Disclosure.  Plans should provide the following disclosures regarding reference-based 
pricing (or similar network design) to plan participants free of charge. 
a.  Automatically.  Plans should provide information regarding the pricing structure, 
including a list of services to which the pricing structure applies and the 
exceptions process.  (This should be provided automatically, without the need for 
the participant to request such information, for example through the plans 
Summary Plan Description or similar document.) 
b.  Upon Request.  Plans should provide: 
i.  A list of providers that will accept the reference price for each service; 
ii.  A list of providers that will accept a negotiated price above the reference 
price for each service; and 
iii.  Information on the process and underlying data used to ensure that an 
adequate number of providers accepting the reference price meet 
reasonable quality standards. 
 
The Departments will continue to monitor the use of reference-based pricing and may provide 
additional guidance in the future, including guidance relating to requirements other than those 
under section 2707(b) that is applicable to non-grandfathered health plans in the individual and 
small group markets that must provide coverage of the essential health benefit package under 
section 1302(a) of the Affordable Care Act. 
 
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