Recently Released Issue Briefs on Excepted Benefits and Reference Pricing
Georgetown University’s Center on Health Insurance Reforms recently released two issue briefs on behalf of State Network, one on reference pricing and the other on excepted benefits. The briefs are in direct response to specific questions raised by several states on these two topics.
Under a reference pricing model, the insurer sets a price cap, i.e., the reference price, for a particular procedure. If an enrollee sees a physician who charges more than the reference price, the enrollee is responsible for both the plan’s normal cost-sharing and the difference between the reference price and the physician’s billed price. This allows insurers to maintain large networks, but still limit costs. While reference pricing has been used by a few large groups, and has saved both the insurer and the enrollees money, it appears to be untested in the small group and individual markets. Furthermore, the federal regulations that address reference pricing are relatively limited in scope. The issue brief explores how reference pricing has been implemented by one large group plan, discusses the federal guidance on the method, and outlines some policy considerations for state regulators to think about when reviewing reference pricing models in the small group and individual markets.
Excepted benefits and short-term, limited-duration insurance are insurance products that are exempted from the Affordable Care Act’s consumer protections. Short-term, limited-duration insurance is similar to comprehensive medical insurance, but is defined by its short duration – coverage for less than 12 months. “Short-term, limited duration insurance” is specifically excluded from the definition of individual health insurance coverage, and therefore not subject to many of the consumer protections of the Public Health Service Act, as amended by the ACA. Excepted benefits are also exempt from these same protections, but are defined quite differently from “short term, limited duration insurance,” and a detailed analysis is required to determine whether a certain product falls into an “excepted benefits” category. The issue brief walks through the categories of excepted benefits and discusses particular product types in detail.