Federal legislation often includes provisions that lead to unintended consequences. One such provision in the Patient Protection and Affordable Care Act (the “Act”) likely has left some hospital benefits managers scratching their heads: a requirement that certain group health plans may not impose greater restrictions on out-of-network emergency care services (Section 10101(h) of the Act).)

Specifically, under the Act, starting in 2011, non-grandfathered plans must provide coverage for emergency services without regard to whether the provider is in-network or out-of-network.

In other words, a hospital that offers an incentive to its employees to use its own emergency room and not its competitors’ emergency room may not provide that incentive through the group health plan because the Act forbids it to impose greater restrictions on out-of-network emergency services.  

While the regulations permit a group health plan to balance bill out-of-network emergency care, the bottom line is that straightforward incentives to use the hospital’s emergency room may be difficult to maintain in a group health plan.  

We’ve heard that some hospitals are considering whether to drop the incentive rather than pay more for a competitor’s service under its group health plan. The provider’s logic is sound: rather than underwrite a competitor’s product, they’ll remove the subsidy from their own. Any reasonable business person would make the same choice. Some others are considering whether to offer some reimbursement through a health reimbursement account (“HRA”), a Band-Aid, at best and one that may or may not work under the Act.  


Time will tell. For now, the intent of this provision in the Act—to provide participants with equal access to in-network and out-of-network emergency services—seems antithetical to the Act’s over-arching goal: to provide affordable health care to individuals.