Congressional Update

by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.

Multiple “Reconciliation” Bills?

This recent ruling from the Parliamentarian fascinates me. Why? Because first, I lived through the ACA “reconciliation” exercise back in 2010, so I have a personal attachment to this arcane process. In addition, I spent virtually every week in 2017, explaining how Republicans could use the “reconciliation” process to attempt to repeal and replace the ACA, and I also tracked Congressional Republicans’ every move throughout the year. Same with the 2017 Tax Reform “reconciliation” exercise. In October of last year, I started chiming in on how Congressional Democrats and the Biden Administration could use “reconciliation” if the Democrats took control of the Senate. AND, because the Democrats DID take control of the Senate, I talked about the “reconciliation” process in each and every one of my updates so far this year. I guess you can call me a “reconciliation” junkie.
- Analysis: BUT, based on what I think I know, I was surprised to hear that the Parliamentarian would allow the majority party to amend the “reconciliation” rules to allow multiple “reconciliation” bills during a fiscal year. As I have explained, the long-standing rule was that the majority party could ONLY use 1 “reconciliation” bill per fiscal year. Having said that though, I have always said that the Senate rules can be changed. Eliminating the “filibuster” is a case-in-point. The filibuster is a “Senate rule.” And the majority party is permitted to CHANGE a Senate rule (here, the filibuster) if at least 51 Senators vote for such a rule CHANGE. But again, I would NOT have thought that the Parliamentarian would rule in favor of allowing the majority party to amend the “reconciliation” rules to allow multiple “reconciliation” bills during a fiscal year. Not because the “reconciliation” rules cannot be changed…THEY CAN. BUT, I would have thought the Parliamentarian would have said NO because of PRECEDENT. What I mean here is this: The Parliamentarian traditionally follows precedent (i.e., how the rules have been followed in the past, and also, how past Parliamentarians ruled on a similar question). In the case of multiple “reconciliation” bills, precedent tells us that only 1 “reconciliation” bill can be acted upon during a fiscal year. So much for precedent.

Is It a 100% Certainty That We Will See Multiple “Reconciliation” Bills?

Most of the press reports on this give everyone the impression that an amendment to the current “reconciliation” rules has already happened (or it will for sure happen). NOT TRUE. The first step in the process here is that a majority in the House and ALL 50 Senate Democrats MUST agree to changing the “reconciliation” rules to allow multiple “reconciliation” bills in a fiscal year.
- Analysis: More specifically, the Parliamentarian’s recent ruling states: “Both Houses of Congress can agree to a new Budget Resolution that amends the most recently agreed to Budget Resolution for the fiscal year.” This means that a majority of the House members must vote in favor of any new Budget Resolution amending the old Budget Resolution. That is likely a given considering the Democrats control the House, but it not necessarily a sure thing because – currently – Speaker Pelosi can only lose 2 votes and still get a majority vote. What about the Senate? Well, as you know, there are 50 Senate Democrats. And in order to “agree” to a new Budget Resolution amending the old one, ALL 50 Senators must vote YES. Will moderate Democratic Senators put the kybosh on Majority Leader Schumer’s dream of gaining access to multiple “reconciliation” bills?? After all, moderate Democratic Senators put the kybosh on eliminating the filibuster. In the end, I believe ALL 50 Senate Democrats will vote YES on a new Budget Resolution amending the old one, paving the way for multiple “reconciliation” bills. To me, the pressure is going to be TOO GREAT for Senators like Sen. Manchin (D-WV) or Sen. Sinema (D-AZ) to say NO to this rule change. BUT, things will NOT come easy, and tensions are certainly going to run high over the next weeks or so as these moderate Democrats warm up to this rule change. Grab your popcorn…

A Wild Care Scenario?

As stated, I think the pressure will be TOO GREAT for any House or Senate Democrat to say NO to a new Budget Resolution that would allow the use of multiple “reconciliation” bills throughout the rest of 2021.
- Analysis: Having said that though, could the pressure be TOO MUCH for someone like Sen. Manchin, which could ultimately result in Sen. Manchin “switching” parties by, for example, becoming an Independent and “caucusing” with the Republicans? This would give Republicans control of the Senate, at least for the rest of 2021 and 2022. This would NOT be new. This is what happened in 2001 when Sen. Jeffords – who at the time was a Republican – “switched” to an Independent and “caucused” with the Democrats. This flipped a 50-50 Republican Senate (because, at the time, Vice President Cheney was the 51^st vote) to Democratic control. Talk about precedent… HOWEVER, I do NOT see the above happening (but stranger things have obviously happened).

Okay, So We Will Likely See Multiple “Reconciliation” Bills, Now What?

Assuming a majority in the House and ALL 50 Senate Democrats will vote YES on a new Budget Resolution amending the old one, what does that mean – AND – not mean?

I will start with what it does NOT mean:

It does NOT mean that Congressional Democrats and the Biden Administration will be able to enact ALL of their priorities. What?!?
- Analysis: First, Majority Leader Schumer still needs ALL 50 Senate Democrats to vote YES on any of the forthcoming “reconciliation” bills. That is NO easy task. Just ask Republicans. Also, it was no walk-in-the-park for Democrats to get the recently enacted COVID Stimulus Package across the finish line, which was billed as “saving America” and the Package did NOT include things like increasing the corporate tax rate. Second, the criteria for getting into a “reconciliation” bill STILL applies. That is, this criteria will NOT be changed. As a result, to get into any of the forthcoming “reconciliation” bills, the provisions MUST impact taxes (i.e., tax increases or decreases) and spending (i.e., spending increases or decreases). Other important “reconciliation” rules will continue to apply like: A particular provision CANNOT increase the deficit in the “out-years” (it must be properly “offset” or given a “termination-date” where the provision goes away (typically within 10 years of enactment)). Also, even if a particular provision impacts revenue or spending, the proposal may NOT be included in the underlying “reconciliation” bill if the policy associated with the proposed change is so significant that it outweighs the budgetary impact. So, for example, at least in my opinion, Congressional Democrats and the Biden Administration will be unable to move things like substantive immigration reforms. Maybe some spending related to immigration could get into a “reconciliation” bill (like spending to update and re-build facilities where certain undocumented aliens (and kids) are housed). Or, maybe even something related to taxes (like saying that undocumented aliens can gain citizenship by paying back-taxes over a period of years). BUT, if the Parliamentarian believes that these proposed changes are more “policy” in nature – and that the policy change here is so significant that it outweighs the budgetary impact – then these provisions will get bounced out of any “reconciliation” bill. Adding to this list of Democratic priorities I do NOT see getting into a “reconciliation” bill: Voting rights reform cannot get into a “reconciliation” bill, or provisions directed at racial inequality, or gun law reforms (unless something like an excise tax is imposed). So again, even though Majority Leader Schumer can bring multiple “reconciliation” bills to the Senate floor, this does NOT mean that we are going to see the enactment of many key Democratic priorities.

What does multiple “reconciliation” bills mean?

It means that Congressional Democrats and the Biden Administration will be able to enact – or at least try to enact – infrastructure improvements, some climate change-related provisions, and some health care-related provisions.
- Analysis: I say “some” because NOT all of the climate change provisions that Democrats want to incorporate into the law can be incorporated into a “reconciliation” bill (because some of these provisions will NOT meet the “reconciliation” criteria I noted above). Same for “some” of the health care-related provisions (for example, I have told you before that I do not believe that ALL of the proposal to add a public option can be incorporated into a “reconciliation” bill). Having said that though, there is still A LOT of OTHER stuff that can be done on infrastructure, and climate change, and health care through “reconciliation.” Also, there are reports that Congressional Democrats would like to pursue other measures like free community college and universal prekindergarten, which may or may not satisfy the “reconciliation” rules. Focusing on health care for a moment, I would expect: A Medicare-Buy-In program; efforts to incorporate a public option to the individual market and/or Sens. Bennet’s (D-CO) and Kaine’s (D-VA) Medicare X public option-like legislation; extending the enhanced ACA premium subsidies and increasing spending for ACA Exchange IT improvements and outreach efforts; Medicaid changes; benefits and tax incentives for long-term care-givers and other child-care or elderly-care givers; drug pricing reforms as “offsets,” just to name a few.

Last comment:

At the end of the day, what multiple “reconciliation” bills really means is FLEXIBILITY.
- Analysis: What I mean by “flexibility” is this: Majority Leader Schumer does NOT have throw the kitchen-sink into 1 last “reconciliation” bill. Instead, as my friend has said to me, it gives Majority Leader Schumer additional “bites at the apple.” And, as I have referred to it, it does NOT mean that Majority Leader Schumer has to ask his Democratic colleagues to swallow the apple whole. Instead, Majority Leader Schumer can take a bite for infrastructure (and tax increases to pay for the infrastructure spending). Then, Majority Leader Schumer can take a bite for climate change (with both related and unrelated “offsets”). Then, Majority Leader Schumer can take a bite for health care (and act on a bill that is health care ONLY, using drug pricing reform as “offsets”). This also gives Majority Leader Schumer room to negotiate with his own Senators. For example, Schumer can say, hey, vote YES on increasing the corporate tax rate so we can enact infrastructure reforms now, and I will give you LOTS of money for your State when we do climate change later in the year. Similarly, vote YES when we try to move a public option and other drug pricing reforms at the end of the year, in exchange for my, first, giving you special infrastructure projects for your State, which will create jobs for your constituents. All of this is going to be fun to watch. There will be twists-and-turns for sure. Ups-and-downs. And there will no doubt be some surprises. As stated, grab your popcorn (an extra large bag :]).

Surprise Medical Billing Update

If you haven’t already guessed, I have been doing a lot of work on the surprise medical billing payment requirements that were enacted at the end of last year. The main reason: Congress gave the Federal Departments only about 7 months to draft regulations implementing portions of the surprise medical billing payment requirements. So, right-off-the-bat, everyone – including me – has been crazy busy trying to interpret the statute (which, by the way, is poorly written) and figure out what additional details and clarifications we all need from the Federal Departments.
- Analysis: As noted previously, the July 1^st regs will primarily focus on how to determine what the in-network median rate is for a particular medical item and service in a particular geographic area, which is a SUPER important benchmark because in some cases, not only will the patient will pay an out-of-network provider the in-network median rate in the geographic area, but during the arbitration/independent dispute resolution (IDR) process, the arbiter MUST take into account the in-network median rate in the geographic area when determining a final payment amount. I also expect the July 1^st regs will provide more detail to some of the other statutory definitions like “emergency” and “ancillary” services, just to name a few. As I mentioned in my last update, the “initial amount” that insurance carriers and self-insured plans may choose to pay to an out-of-network provider is NOT defined in the statute. Providers certainly want a definition for this “initial amount,” or otherwise, they will be waiting until later in the surprise billing payment process (which I discuss more fully below) to finally get some money. Carriers and self-insured plans also want some sort of definition of the “initial amount” that is reasonable and not an arbitrary definition developed by the Federal government. One idea is to base the “initial amount” on what the plan document or insurance contract says.

Surprise Billing and Preemption

Lately, I have been focusing my attention on “preemption.” In particular, cases where State law will preempt Federal law. And in other cases, where Federal law will preempt State law.
- Analysis: If you will indulge me, I am going to provide you with my thoughts on preemption by walking through what I believe are the “steps” in the surprise medical billing payment process. On this preemption question, I will focus specifically on Step #1 and Step #5, as discussed more fully below.
Step #1: After a medical item or service is furnished by an out-of-network provider during an emergency or at an in-network facility, the patient will ONLY pay to the out-of-network provider what the statute calls the “Recognized Amount.”
Step #2: The out-of-network provider will then send a bill to the insurance carrier (in the case of a “fully-insured”) and the plan (in the case of a “self-insured” plan) for any amounts in excess of what the patient already paid.
Step #3: Once the carrier or self-insured plan receives the bill, they can choose to pay the provider an “initial amount” or they can deny the claim out right (as noted above, the statute does NOT define what the “initial amount” is, but I do expect the Federal Departments will attempt to define “initial amount” in the forthcoming July 1^st regs).
Step #4: After the carrier or self-insured plan either pays this undefined “initial amount” or denies the claim outright, the carrier/plan and the provider will negotiate with each other to determine how much the carrier/plan will pay to the provider for any excess over and above what the patient paid (note, depending on whether the carrier/plan paid the provider an “initial amount” – and depending on how much that “initial amount” was – maybe the carrier/plan and the provider agree that this is enough money and the case-is-closed).
Step #5: If the negotiations do not yield an agreed upon payment amount, in some cases, either party can take the other party to arbitration/IDR for a final determination of how much the carrier/plan will pay for the out-of-network charge (but see below for more on this).
Step #6: If arbitration/IDR is utilized, the carrier/plan must pay to the provider whatever the arbiter decides.

OKAY, let’s talk about preemption:

Under Step #1 above, I explained that the patient pays the “Recognized Amount.” The statute defines the “Recognized Amount” as 1 of the following 3 amounts:

If the medical item or service was furnished in a State that has enacted its own State-based surprise medical billing law, the amount payable by the patient is the amount specified under this State law.
If the medical item or service was furnished in a State that does NOT have its own State-based surprise medical billing law, the amount payable by the patient is equal to the median in-network negotiated rate for the medical item or service in the geographic area the medical item or service was furnished.
If a State has an All-Payer Model Agreement, the amount payable by the patient shall equal an amount approved by the State under that system (note, Maryland is currently the only State that has an All-Payer Model Agreement in place).

In A above, the statute says that the amount the patient will pay (i.e., the “Recognized Amount”) will be dictated by a State surprise billing law, should such a law be in place. In this case, it is clear that State law preempts Federal law. It is SUPER important to emphasize that “this case” is limited to patients covered under a “fully-insured” plan. This is because a State surprise billing law ONLY applies to “fully-insured” plans. For “self-insured” plans, ERISA preempts any State surprise billing law. Soooooo, in the case of a “self-insured” plan, Federal law preempts State law. Which begs the following question:

If a “self-insured” plan participant is NOT required to pay what the State law dictates, what is the “Recognized Amount” for this “self-insured” plan participant? My answer: The “self-insured” plan participant will – by default – pay the in-network median rate in the geographic area. Again, Federal law preempts State law here, so I believe a “self-insured” plan participant should follow B above (note, some State laws allow “self-insured” plans to “opt in” to a State surprise billing law…while this does NOT happen very often – if at all – maybe the Federal Departments give “self-insured” plans a choice: (1) “opt in” to the State surprise billing law or (2) follow the Federal requirement under B).

Under Step #5 above, the statute tells us that the carrier/plan will pay the out-of-network provider 1 of the following 3 amounts:

If the medical item or service was furnished in a State that has enacted its own State-based surprise medical billing law, the amount payable is the amount specified under this State law.
If the medical item or service was furnished in a State that does NOT have its own State-based surprise medical billing law, the amount payable is equal to (1) an amount determined by an arbiter through the arbitration/IDR process – OR – (2) an amount agreed upon by the insurer and the provider through their own negotiations.
If a State has an All-Payer Model Agreement, the insurer shall pay an amount approved by the State under that system (as stated, Maryland is currently the only State that has an All-Payer Model Agreement in place).

Similar to our discussion above, if we are talking about a “fully-insured” plan, it is clear that the State surprise billing law dictates how much the insurance carrier is required to pay, thus telling us that State law preempts Federal law. To me, this is important because if a State’s surprise billing law has its own arbitration/IDR process that differs from the process developed under Federal law, I believe the State’s arbitration/IDR process MUST be followed. Also, similar to our discussion above, ERISA preempts a State surprise billing law, and thus, Federal law preempts State law, which means that the “self-insured” plan will pay the provider (1) an agreed-upon negotiated amount – OR – (2) whatever the arbiter decides through the Federally-developed arbitration/IDR process (query whether a “self-insured” plan can “opt in” to a State surprise billing law to, for example, follow the State’s arbitration/IDR process instead of the Federally-developed process?). Last comment on preemption: The end-of-year legislation ALSO required insurance carriers and self-insured plans to provide to patients updated “provider network” information. As you may know, a number of States have already enacted their own State “provider network” laws. Unlike the statutory language on the surprise billing payment process (which is silent on these questions of preemption), the statutory language associated with this “provider network” requirement is clear that State law WILL preempt Federal law, and thus, insurance carriers MUST follow the State “provider network” law, if there is one. Self-insured plans, on the other hand, will follow the Federal requirement because ERISA preempts a State “provider network” law.

The Advanced Explanation of Benefits Requirement Is SUPER Confusing

As we all try to guess what might be in the July 1^st regulations, I am guessing that any guidance relating to the Advanced Explanation of Benefits – or AEOB – that insurance carriers and self-insured plans must send to their plan participants will NOT be in the July 1^st regs. I hope I am wrong.
- Analysis: Let me at least try to summarize what this AEOB requirement says: In short, in cases where a plan participant schedules the furnishing of a particular medical item or service in advance, the carrier/self-insured plan must – in advance of the actual furnishing of the medical item or service – send specific information to the participant. For example, if the participant schedules a medical item or service to be furnished at least 10 days in advance, within 3 days after the date of such scheduling, the medical provider that is scheduled to furnish the medical item or service must notify the plan, and also, send the plan a good faith estimate of the provider’s cost for the medical item or service that is to be furnished. Within 3 days of receiving this notice from the provider, the carrier/plan must send the AEOB to the participant. In cases where a participant schedules a medical item or service to be furnished at least 3 days in advance, the provider must notify the carrier/plan – with a good faith estimate of the cost – within 1 day of the scheduling. The carrier/plan is then required to send the AEOB to the participant within 1 day after receiving this notice from the provider. I know that sounded pretty confusing…because IT IS CONFUSING. AND, this AEOB requirement is really dependent on the medical provider that is furnishing the medical item or service to notify the carrier/plan in the first place. What happens if the provider does NOT send the carrier/plan a timely notice?? As stated, I do NOT expect that the July 1^st regulations will talk about this AEOB or the providers’ notice obligations. BUT, I assume we will see some sort of guidance from the Federal Departments on this at some point, which is sorely needed because there are a ton of administrative burdens – and potential financial penalties – for both the carrier/plan and the provider.