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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.






Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104







October 23, 2014


 Health and Welfare Law Alert





Agencies Issue Guidance on Applicability of PPACA's Cost-Sharing Limitations

to Reference-Based Pricing




IRS, DOL, and HHS have jointly issued FAQ Part XXI, which provides guidance on the application of PPACA cost-sharing limits for non-grandfathered group health plans that employ a reference-based pricing design. Specifically, FAQ XXI identifies the factors that the agencies will use to determine if a plan that utilizes reference based-pricing is using a "reasonable method" to ensure adequate access to quality providers at the reference price.


Background. Reference-based pricing is a system under which the plan pays a fixed amount for a particular drug, procedure or other service, which certain providers will accept as full payment. When an individual uses a provider that does not accept this amount, the individual is required to pay the difference between the reference price and the price actually charged for the service. This payment by the individual is one type of "balance billing."


PPACA's cost-sharing limits (i.e., the out-of-pocket maximums) place annual caps on the costs that non-grandfathered plans can require an individual to spend for covered essential health benefits. (Co-payments, coinsurance, and deductibles generally count toward PPACA's cost-sharing limits. However, premiums, balance billing amounts and non-covered health services are not counted.) For plan or policy years beginning in 2015, PPACA's out-of-pocket limits are $6,600 for self-only coverage and $13,200 for other coverage.  


FAQ XXI Guidance.The agencies will consider "all the facts and circumstances" when evaluating whether a plan's reference-based pricing design is using reasonable methods to ensure access to quality providers at the reference price. In particular, the agencies will focus on the following factors: 

  • Type of services provided. Plans should only apply the reference-based pricing design to services provided when an individual has time to make an informed choice about the provider. For example, a plan should not apply the reference-based pricing design to emergency services.
  • Reasonable Access. Plans should utilize procedures that ensure an adequate number of providers that accept the reference price are in the network. Considerations include state-level standards for adequacy, geographic distance measures and patient wait times.
  • Quality Standards. Plans should utilize procedures that ensure an adequate number of providers that accept the reference price meet reasonable quality standards.
  • Exceptions Process. Plans should maintain an easily accessible exceptions process for times when there is no provider that accepts the reference price for the service or when the quality of service for an individual could be compromised.
  • Disclosure. Plans should automatically furnish information regarding the reference base pricing design, including the services to which it applies and the exceptions process. Upon a participant's request, plans should also provide certain information, including provider lists and information on the procedures used to ensure providers meet reasonable quality standards.

Action Steps. Sponsors of non-grandfathered group health plans that utilize reference-based pricing designs are advised to carefully review their plans and implement any required adjustments to ensure compliance with the standards identified in FAQ XXI. It is important to note that a plan's failure to meet these standards may result in penalties for noncompliance.


The FAQs are available at: http://www.dol.gov/ebsa/pdf/faq-aca21.pdf




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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.