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Out-of-network involuntary medical care: An analysis of emergency care provisions of the Patient Protection and Affordable Care Act  

T. Scott Thompson
White paper
August 31, 2010
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This paper, authored by Dr. T. Scott Thompson, explores new requirements found in the Patient Protection and Affordable Care Act (PACA) that impact health plans offering benefits for emergency services, and provides an economic analysis of the likely consequences of the new provisions and rules.

The PACA provisions, along with the corresponding sections of the Interim Final Rules (IFR), prohibit the use of preauthorization requirements, regulate cost-sharing provisions for out-of-network emergency care, and establish minimum health plan reimbursement levels to providers for out-of-network emergency care. In his paper, Dr. Thompson concludes that these new provisions may fall short of the goal of protecting patients from high costs for emergency care and may also  reduce emergency providers’ incentives to join health plan provider networks. Specifically, the paper draws four conclusions about the consequences of the new PACA and IFR provisions:

  1. Neither PACA nor the corresponding IFR offer meaningful patient protections against balance billing by out-of-network emergency service providers.
  2. The rate regulations in the IFR arbitrarily define “reasonable” reimbursement.
  3. The rate regulations require calculation of a median in-network rate for each plan; this proposal suffers from numerous conceptual and practical flaws.
  4. By increasing the profitability of out-of-network emergency service provision relative to in-network provision, the IFR provisions may undermine some emergency service providers’ incentives to participate in health plan networks.