Group Health Plans and Discrimination Rules - The National Law Review

Section 108, Division BB of the Consolidated Appropriations Act, 2021 requires the Departments of Labor, Health & Human Services and the Treasury (the “Departments”) to issue regulations under Section 2706(a) of the Public Health Service Act (the “Provision”). The Provision bars group health plans and health insurance carriers from discriminating, with regard to participation under a plan or coverage, against any health provider that acts “within the scope of its license or certification under applicable state law.” Once issued, these rules will have important consequences for group health plans and other stakeholders.

This post reports on a recent listening session organized by the Departments that offered a forum to examine the issues and for interested parties to stake out their positions.

Background

Section 2706(a) of the Public Health Service Act, as enacted by the Affordable Care Act, bars group health plans and health insurance carriers from discriminating, with regard to participation under a plan or coverage, against any health provider that acts “within the scope of its license or certification under applicable state law.” Section 2706(a) is incorporated by reference into ERISA Section 715(a)(1) and Internal Revenue Code Section 9815(a)(1). As a consequence, the Departments have concurrent jurisdiction over the implementation of Provision. It is also the reason why group health plans of all stripes have a stake in the matter.

In FAQs issued in April 2013, the Departments said that the Provision was “self-implementing.” Regulations, in their view, were therefore unnecessary. Shortly thereafter, the lawmakers took issue with the Departments’ assessment. From S. Rep. No. 113-71 at 126 (Jul. 11, 2013):

The goal of this provision is to ensure that patients have the right to access covered health services from the full range of providers licensed and certified in their State. The Committee is therefore concerned that the FAQ document issued by [the Departments] on April 29, 2013, advises insurers that this nondiscrimination provision allows them to exclude from participation whole categories of providers operating under a State license or certification. In addition, the FAQ advises insurers that section 2706 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. Section 2706 was intended to prohibit exactly these types of discrimination. The Committee believes that insurers should be made aware of their obligation under section 2706 before their health plans begin operating in 2014. The Committee directs HHS to work with DOL and the Department of Treasury to correct the FAQ to reflect the law and congressional intent within 30 days of enactment of this act.

(Emphasis added).

The House of Representatives also questioned the Departments’ failure to act. In response, the Departments issues a revised FAQ, which provided, in relevant part:

Q4. What is the Departments’ approach to PHS Act section 2706(a)?

In light of the breadth of issues identified in the comments to the RFI, the Departments are restating their current enforcement approach to PHS Act section 2706(a). Until further guidance is issued, the Departments will not take any enforcement action against a group health plan, or health insurance issuer offering group or individual coverage, with respect to implementing the requirements of PHS Act section 2706(a) as long as the plan or issuer is using a good faith, reasonable interpretation of the statutory provision…

The lawmakers were apparently irked by the lack of clarity on whether, or to what extent, a plan could leave out certain types of providers and still be acting under a “good faith, reasonable interpretation” of the statute. The issue resurfaced in Section 108, Division BB of the Consolidated Appropriations Act, 2021, which requires the Departments to issue regulations under the Provision.

The Statute

Section 2706(a) of the Public Health Service Act reads as follows:

A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State law. This section shall not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section shall be construed as preventing a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures.

The rule is all of three sentences, two of which tell us what non-discrimination is not. The section’s normative rule bars discrimination by a group health plan against “any health care provider who is acting within the scope of that provider’s license or certification under applicable State law.” In writing regulations, the Departments are going to need to specify what, exactly, constitutes discrimination. While the rule seems straightforward enough, what it means for employer-sponsored group health plans is less than clear. For example:

Could a self-funded group health plan chose not to cover, say, chiropractic services? The passage from the above-cited Senate report appears to think that this should not be allowed under the Provision. But what distinguishes this reading of the rule from the establishment of a garden variety any-willing-provider requirement? Or does this mean that, if a plan chooses to cover chiropractic services, then it must agree to contract with all licensed chiropractors in the state? And, if so, would even this limited reading pass muster?

Can an employer vary the amounts paid to a provider based on skills, geography, education and experience in addition to quality measures?

Section 2706(a) does not say.

One would hope this is the case. It is certainly consistent with the language that does not require contracting with any willing provider.

Might the rule be read to simply require that an employer/group health plan sponsor be able to furnish a good reason for treating providers differently?

Part of the carrier’s value proposition is building and curating of a network. To the extent that the Departments read the Provision broadly, this value proposition is potentially undermined.

The Listening Session

On January 19, 2022, the Departments hosted what was billed as a “listening session” regarding provider non-discrimination under Section 2706(a) of the Public Health Service Act. The event featured presentations by more than a dozen representatives of trade associations with an interest in the Provision, including carriers, various provider organizations, and business-oriented organizations. While the participants in the listening session represented diverse and competing interests, there were some areas of agreement. For example, the view that the Provision is not an “any-willing-provider” mandate was unanimous.

Not surprisingly, the session also exposed certain fault lines that divided interested parties. Providers generally urged a broad reading of the rule, i.e., an “any-licensed-provider” reading. The problem with this approach is that one would be hard-pressed to distinguish between an any-willing-provider rule and an “any-licensed-provider” rule. Providers would also like to see payment parity for a particular service irrespective of the provider’s license. While such an approach would mark a radical departure from current practice, it does not appear to be prohibited based on the text of the Provision. Group health plans, on the other hand, would prefer the status quo ante. The problem with that is, of course, that Congress must have intended the statute to do something. Lastly, carriers urged the Departments to protect their ability to design and monitor their networks. While their concern is understandable, it seems that there will be some impairment of this ability, if only at the margins.

Conclusion

The issues raised above invite a fundamental question: what, if anything, is left of the first sentence of Section 2706(a) of the Public Health Service Act once the second and third sentences are applied? One presumes that Congress must have intended that there be some residue. It is up to the Departments to determine the contours of that residue. Where they come out could be enormously consequential for employer-sponsored group health plans.