Biden Administration Update
Biden Administration Update
by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
The “Script” for 2021
- As I have been watching 2021 unfold, I believe the Biden Transition Team developed the following “script” for the year:
- Analysis: Act I, Scene I: Over the first 2 weeks President Biden is in office, the President will message, message, message through Executive Order, after Executive Order, after Executive Order. The messages: (1) Hey Democratic-base, you elected me so, in turn, I plan to work on Democratic priorities like racial inequality, voting reform, police reform, immigration, health care, and climate change – (2) For those of you who “hate” President Trump, I am going to UNDO all of the policies and regulations developed and issued by the Trump Administration – and (3) with respect to COVID, call me the COVID Czar because I am going to save America from the pandemic. The Biden Transition Team succeeded in this messaging campaign by issuing 45 Executive Orders within the first 2 weeks, far exceeding the number of EOs any past President has issued. As of March 8th, the count is up to 50 EOs.
- Act I, Scene II: President Biden needs to attack the COVID pandemic, and the best way to do that is to get Congress to pass a $1.9 trillion COVID Stimulus Package. Despite calling for a bi-partisan compromise, President Biden MUST “get it done,” and the ONLY way to get everything that President Biden wants is to roll Republicans and fast-track the $1.9 trillion Package through the “reconciliation” process, which only requires 51 votes. Although it was not easy getting all 50 Senate Democrats to vote YES on the $1.9 trillion COVID Stimulus Package, President Biden checked-this-box by signing the Package into law on March 11th.
- Act II, Scene I: Now that we have (1) successfully “messaged” our priorities and (2) successfully enacted the COVID Stimulus Package, we need to turn to regulations. By this point (e.g., April 1), most of our “political” nominees and appointees will finally be making their way into the Federal Departments – and as a result – our “political” nominees/appointees will finally be able to sign-off on regulations and guidance that the “career” Federal Department employees have been diligently drafting over the past 3 months. In addition, this “political” Leadership will be able to make policy calls on other priorities and begin work on drafting regulations effectuating these policy calls. It is typical for any new Administration to experience a lag in “political” nominees/appointees finding their way into the Federal Departments. The Biden Transition Team knew this, and they also knew there might be an even longer lag because Congress was expending all of its energy on the COVID Stimulus Package, which didn’t leave much oxygen for approving nominees. But now that the COVID Stimulus Package is the law (the goal was mid-March, which the Democrats hit), Senate Democrats can turn their attention to nominee/appointee approvals. And with this new “political” Leadership finally getting into place, the Federal Department and Agencies can finally sign-off on specific policy changes ranging from re-limiting short-term health plans and taking additional steps to eliminate the Medicaid work requirements to revising and/or reissuing regulations on 340B drug discount cuts, regs requiring PBMs to pass on rebates in Medicare Part D, and green-lighting or revising some CMMI projects like the direct contracting pay model and direct primary care model, just to name a few. Surprise medical bill regulations too (which I talk more about below).
- Act II, Scene II: While the Federal Departments churn out regulations, the President will work with Congress to develop a 2nd “reconciliation” bill that can be considered in the 4th Quarter of 2021. Work on this 2nd “reconciliation” bill will begin as soon as the COVID Stimulus Package is enacted into law (e.g., April 1), and work will continue throughout the Summer with the goal of approving – by the end of July – a 2022 Budget Resolution with “reconciliation” instructions to work on issues like infrastructure, climate change, health care, and even immigration later in the 4th Quarter. As I have mentioned to you, this 2nd “reconciliation” bill will include a number of Democratic priorities like infrastructure, climate change, and health care. Some Democratic policymakers will push for immigration changes, but as I have explained, I do NOT believe that immigration policies can be enacted through the “reconciliation” process. BUT, trying to move immigration policy through “reconciliation” will give the Democrats a great opportunity to “message” on the issue. As I have also told you, to “offset” all of the infrastructure and health care spending, there is no doubt in my mind that this 2nd “reconciliation” bill will include prescription drug reforms (which I talk more about below) AND ALSO tax increases (e.g., increasing the corporate tax rate, increasing the top tax bracket back to 39.6%, increasing the capital gains rate, lowering the exemptions for the estate tax, and taxing the wealthy through a 2% sur-tax).
- INTERMISSION (i.e., August recess)
- Act III: After Labor Day, we will start to push our 2nd “reconciliation” bill through the relevant Committees, with the goal of bringing the 2nd “reconciliation” bill to the House and Senate floor as early as October, but more likely December. What a great Christmas present it will be for us to deliver a 2nd “reconciliation” bill that includes most – but not all – of our Democratic priorities on or before Christmas Eve. So there you have it – what I am calling the “script” for 2021. And just to add to this “script,” I believe that the Biden Transition Team said to themselves: We have to get ALL of this done by the end of 2021, because if our efforts to enact Democratic policy priorities slip into 2022, we are going to have a harder time enacting these changes, but more importantly, any continued efforts in 2022 will likely have a negative impact on our chances to hold on to the House and to add to our Democratic majority in the Senate in the 2022 mid-term elections.
ACA Exchange Update
Was This All Part of the Plan?
- I am seeing another “scripted” effort in the case of (1) the COVID “special enrollment period” that President Biden announced back on Jan. 28th and (2) the enhanced premium subsidies that the COVID Stimulus Package just added to the law. What??
- Analysis: When HHS announced how the Department would be implementing the COVID “special enrollment period,” HHS said that – as part of this COVID SEP – current Exchange plan enrollees could change their plans if they wanted to do so. Allowing mid-year changes was a surprise to most people, including me. HHS also explained that the “attestation” requirement for qualifying for the COVID SEP is pretty much nil. In other words, all that a current Exchange plan enrollee has to do to change their plan is to simply say “hey, I am affected by COVID” – even if they are not affected by COVID – and HHS will allow the enrollee to change their plan. This was NOT a surprise to most people, including me. Fast-forward to the enactment of the enhanced premium subsidy provisions in the COVID Stimulus Package. The Package did NOT create a “special enrollment period” so current Exchange enrollees could take advantage of the increased subsidy amounts, let alone switch to a different plan. Technically, current Exchange enrollees would have to (1) wait until the 2022 “open enrollment” to switch plans and (2) wait until they filed their taxes to benefit from the increased premium subsidies. HOWEVER, the reason why I believe a special SEP was NOT created in the COVID Stimulus Package is because these current Exchange enrollees could ALREADY take advantage of the COVID SEP to get the increased subsidy amounts. AND, with the increased premium subsidies, existing enrollees could switch to a more comprehensive plan if they wanted to (because the increased subsidy amount has greater “buying power” so an enrollee could “buy-up” without having to pay more $$ out of their own pocket). Soooooo, it seems to me that all of this was coordinated – and “scripted.” What I mean is, although the COVID SEP was announced about a month and a half AHEAD of the arrival of the increased premium subsidies becoming law, the Biden Administration apparently rolled-the-dice and hoped that they could pull off this one-step (announce the COVID SEP) – two-step (enact the COVID Stimulus Package). In the end, they got it done. Kudos!
What About Individuals Currently Enrolled In an “Unsubsidized” Individual Market Plan?
- Current law creates a “special enrollment” period for individuals who are newly eligible for a premium subsidy. In general, this means that if an individual becomes subsidy eligible because, for example, their income dropped, they could enroll in an Exchange plan and access a premium subsidy.
- Analysis: As you know, the COVID Stimulus Package now allows individuals with income ABOVE 400% of FPL to access a premium subsidy if they purchase an Exchange plan. This means that individuals with income ABOVE 400% of FPL are now NEWLY eligible for a premium subsidy, which should enable them to enroll in an Exchange plan (and access a premium subsidy) through this particular SEP. Even if there is a question, the COVID SEP is available to these newly subsidy-eligible individuals any way. In the case of an UNINSURED individual with income ABOVE 400% of FPL, it is pretty straightforward for them: They can simply go to HealthCare.gov or a State-based Exchange and access a premium subsidy by enrolling in an Exchange plan. HOWEVER, what about an individual with income ABOVE 400% of FPL who is currently ENROLLED in an “unsubsidized” individual market plan as of Jan. 1, 2021? Answer: This individual can also enroll in an Exchange plan either through the COVID SEP or the newly subsidy-eligible SEP. BUT, this individual must first contact their current insurance carrier and inform the carrier that they want to terminate their existing coverage, and once the coverage is terminated, they can enroll in an Exchange plan (i.e., the person CANNOT have coverage under both an Exchange plan AND an “unsubsidized” plan).
The Senate Filibuster Is In the News Again
- I am loathe to talk about this, but the debate over the filibuster continues to rear its ugly head. It all started with Sen. Manchin (D-WV) saying that while he would never ELIMINATE the filibuster, he would be open to LIMITING the filibuster to what everyone is now referring to as a “talking filibuster.”
- Analysis: What is the “talking filibuster”? No one has clearly defined it yet, but here is how people are suggesting it would work: Under the current Senate rules, any individual Senator (remember, there are 100 of them) can require that any piece of legislation be held to a recorded vote. Once a piece of legislation is subject to a recorded vote, the 60-vote threshold rule kicks in, requiring 60 Senators to agree to allow the bill to be held to a final vote. If 60 Senators do NOT agree, the bill dies. BUT, the “talking filibuster” would require those Senators who oppose a particular piece of legislation to “talk” on the Senate floor about their opposition to the bill, where this “talking” would be permitted to go on for a specified period of hours or days. Then, once the allotted hours or days end – or whenever the opposing Senators simply stop taking, whichever is first – the majority party can then decide whether they still want to move forward with the bill, and if the majority party decides to move forward, the bill could be passed with 51 votes (and NOT be subject to the 60-vote threshold). I’m going to go out on a limb and say this: There is NO WAY this “talking filibuster” is ever agreed to in the Senate. Yes, I know that President Biden just threw his support behind this “talking filibuster,” but come on, this is all rhetoric to gin up more support for eliminating the filibuster – or at the least – to gin up support for eliminating the filibuster for 1 particular issue. What?!? It is important to understand that the Senate is allowed to eliminate the filibuster for 1 particular issue if at least 51 Senators want to. For example, the at least 51 Senators have already eliminated the filibuster for Federal nominees, requiring only 51 votes for approval. Also, Circuit and District Court judges are only subject to a 51-vote threshold. The Senate also eliminated the filibuster for Supreme Court nominees. Other exceptions to the filibuster include certain trade deals or even military base closures. Sooooooo, the idea here is this: Some Democrats want to eliminate the filibuster for 1 particular issue – like “voting rights” – but THAT’S IT. This way, the 60-vote threshold is preserved for almost every other piece of legislation. BUT, when it comes to a bill on “voting rights”…NO filibuster. This is why I believe Democrats continue to turn the volume up on eliminating – or somehow modifying – the filibuster. The more pressure they can build up and place on the shoulders of Sen. Manchin, and also Sen. Simema (D-AZ), the better the chance Democrats have to twist Sens. Manchin’s and Sinema’s arm to eliminate the filibuster at least for particular issues, like the issue of “voting rights.” Stay tuned as the filibuster wars continue, which will no doubt spill into the Fall and impact the consideration of the 2nd “reconciliation” bill (i.e., will the Senate Democrats say to Sens. Manchin and Sinema: Throw us a bone here and at least support us if and when we ignore the Parliamentarian if and when she rules that all or a portion of a “public option” cannot be included in the underlying “reconciliation” bill)…
Health Care Policy Update
Surprise Medical Billing Regulations Coming Soon
- We are only 19 weeks away from the first set of surprise medical billing regulations being released. This first set of regulations – which Congress directed the Federal Department to release by July 1st – are supposed to describe the “methodologies” insurance carriers and self-insured plans must use when determining the median in-network rate for a particular medical item or service in a particular geographic area.
- Analysis: More specifically, the statute requires the Federal Departments (i.e., HHS, DOL, and Treasury) to spell out how the geographic areas are to be determined for purposes of determining the amount of the median negotiated in-network rate. Will the regulations track Medicare’s geographic payment map, population density, provider density, or the ACA’s rating areas (i.e., zip codes)? The statute does direct the Federal Departments to take into account “access to items and services in rural and underserved areas.” The statute also provides that when developing the methodologies for determining the in-network median rate, the Federal Departments are required to take into account “payments that are made by the insurer or plan that are NOT on a fee-for-service basis.” To me, this opens the door to developing a rate based on a percentage of Medicare. Why is this important? Because the statute prohibits an arbiter from taking into account “public health plan” rates (like Medicare) when determining a final payment amount during arbitration/IDR, which has prompted a lot of people – including me – to wonder whether the arbiter can take into account rates based on a percentage of Medicare in arbitration/IDR. BUT, here is my thinking: If insurers and self-insured plans can determine the median in-network rate based on a percentage of Medicare, by operation of the statute the arbiter should be allowed to take into account rates based on a percentage of Medicare in arbitration/IDR. We shall see – in time – if I am right. The statute also confusingly tells insurers and self-insured plans how to determine the median in-network rate in a geographic area if the insurer/plan does NOT have enough information to determine what that median in-network rate should actually be. For example, in cases where an insurer or self-insured plan does not have enough information to calculate the median in-network negotiated rate for the first coverage year, the statute explains that an insurer/plan can use a database that is approved by Federal Departments in regulations. Ummmmm, what database?!? Answer: We have NO idea. HOWEVER, at least we do know this: The statute does say that for any database to get HHS, DOL, and Treasury approval, it must “not have any conflicts of interest” and it must have “sufficient information reflecting allowed amounts paid to a provider for a medical item or service furnished in the applicable geographic area.” Note, this clarifying language for determining an appropriate database was added to the statute in response to concerns raised by the insurer and employer communities that certain databases (e.g., FAIR Health) are NOT representative databases that payors should be required to use when determining the initial median in-network rate for medical items and services in a particular geographic area. Another question that most providers hope will be addressed is this: When will the insurers and plans be required to share the in-network median rate that the insurer/plan has identified with the provider? As I read the statute, although the patient is held harmless from excess out-of-network charges, the patient’s cost responsibility is whatever the in-network median rate is for the medical item or service that was furnished in the geographic area. As a result, we know that the provider will – at the least – be paid the in-network median rate for the medical item or service that was furnished. BUT, when will the provider know how much they are getting paid? The provider needs to know this amount at some point so the provider can determine how much more it wants to charge the insurer or plan. Last comment: Because the Federal Departments were ONLY given 7 months to develop this first set of regulations (remember, these requirements were signed into law on Dec. 27, 2020), it seems to me that the Federal Departments do NOT have enough time to go through the normal rulemaking process (i.e., we probably won’t see proposed regs, a public comment period, then final regs). Instead, it is more likely that the Federal Departments will issue Temporary regulations or an Interim Final Rule. Here, the Federal Departments will say: Look people, we didn’t have time to get your input, so here are the rules that you have to live by. BUT, we want to hear your comments on these rules – and in the future – we will take your comments into account should we want to modify our temporary rules. Note, any future modifications will be made through the normal rulemaking process of proposed regs, public comments, final regs.
Prescription Drug Reforms Coming Soon
- As I have continually said to you, I fully expect we will see prescription drug reforms in the 2nd “reconciliation” bill, not only as much-needed “offsets” for the infrastructure and health care spending, but also as policy changes that the Democrats deeply believe in. To this end, I am going to focus my attention on calling out some of the changes included in the House Democrats’ prescription drug pricing bill from last year – H.R. 3 – which you may or may not be familiar with.
- Analysis: I am focusing on H.R. 3 because – doy – the Democrats control both the House and Senate and, of course, they are going to continue to pursue the policy changes they pursued in the past. Yah, maybe there are some changes, like some additional prescription drug reforms. BUT, I just can’t see there being many subtractions, if any. Soooooo, what are these reforms:
- The Government Negotiating Medicare Drug Prices: The Secretary of HHS would be given the authority to directly negotiate drug prices for Medicare. More specifically, every year, the Secretary of HHS would identify the 250 brand-name drugs that lack price competition with the greatest cost to Medicare. The Secretary would use data provided by Medicare, Medicaid, and private health plans to make the determination about aggregate cost, which is a measure of price and volume of sales. The Secretary would negotiate as many drugs as possible each year, but be required to negotiate the cost of at least 50 drugs a year. Again, the negotiated prices would be applied to Medicare, with flexibility for Medicare Advantage and Part D plans to use additional tools to negotiate even lower prices. A drug manufacturer would also be required to offer the negotiated price to “group” and “individual” market plans.
- Average International Market Price: Related to negotiated drug prices for Medicare, H.R. 3 would establish an “Average International Market” price based on average drug prices in 6 countries (Australia, Canada, France, Germany, Japan, and the United Kingdom), and the upper limit for any negotiated drug prices would be set at 1.2 times this “Average International Market” price.
- Inflationary Caps/Rebates: H.R. 3 would require manufacturers of all drugs sold to Medicare Part B and Part D who have raised the prices of their drugs more rapidly than inflation since 2016 to either (1) lower the price of the drug or (2) pay the above-inflation amount back to the Treasury as a rebate. H.R. 3 was further amended to require the Federal government to issue regulations restricting drug manufacturers’ ability to raise prices above the rate of inflation for “group” and “individual” market plans.
- Maximum Out-Of-Pocket Limit for Part D Beneficiaries: Currently, there are NO out-of-pocket maximum limits for Part D beneficiaries, meaning any out-of-pocket costs under Part D must come out of the beneficiary’s own pocket. H.R. 3 capped a beneficiary’s out-of-pocket costs at $2,000.
The Congressional Budget Office (CBO) estimated that these prescription drug reforms would raise around $500 billion, give-or-take. So again, since the Democrats need “offsets,” well, you know…