By: Jon Jablon, Esq. Codified at both 29 CFR §2590.715-2719A (b)(3) ( https://www.law.cornell.edu/cfr/text/29/2590.715-2719A ) and 45 CFR §147.138 ( https://www.law.cornell.edu/cfr/text/45/147.138 ), federal regulations explain the “Cost-sharing requirements” with a requirement colloquially known as the “greatest of three” rule. This rule essentially says that for out-of-network emergency services, self-funded health plans must allow claims at the greatest of (1) 100% of Medicare, (2) the amount the plan would allow for non-emergent out-of-network claims (in other words, Usual and Customary, Maximum Allowable Charge, etc.), or (3) the median contracted rate for emergency services. It’s that third one that so often causes issues for plans, since this amount is, at best, difficult to calculate, or at worst, impossible to calculate. The difficulty first arises when examining which contracted rates must be taken into account: just network contracts (since the regulation says “The amount negotiated with in-network providers”), or all contracted rates? Even though the regulation says “in-network,” we have to take a practical look at this. Some plans access more than one network. Some plans don’t even use a “network,” instead opting for a system of many direct provider contracts. The question then becomes: are such plans somehow exempted from this regulation? I would be very hesitant to confirm that – and therefore it seems the most reasonable interpretation is that when the regulation says “the amount negotiated with in-network providers,” what it means is all negotiated rates with providers. The difficulty continues when the network utilized is secretive about its contracted rates. Many networks have historically had no reason to disclose all negotiated rates with medical providers, and have somewhat inexplicably refused to provide that information to payors. Now that payors so often need that information, however, we have not seen a change in the secretive mentality. The fact is, payors need this information to be able to comply with federal law! It’s only a matter of time until the regulators realize the dynamic, and require PPO networks to disclose their negotiated rates to payors for this exact purpose. My point here is that self-funded plans need to be acutely aware of the “greatest of three” regulation, and a best practice is to be proactive and determine the median contracted rate as soon as possible – since it can take longer than the time allotted to pay a given non-contracted emergency claim! We are seeing more and more appeals from medical providers that vaguely attest that the health plan has violated that provision, because providers are becoming wise to the fact that many TPAs and plans really are struggling to perform that calculation. Although seeing a plan get sued over a denial is certainly never a good thing, it is the only way to compel useful guidance, and perhaps even create meaningful regulation of the entities that possess, but will not provide, the information that plans need to comply with this federal regulation!