by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
December In Congress
- Congress once again embarked on its annual Kabuki dance (a.k.a., the round-and-round negotiations over legislation to keep the government funded, and also the harried – sometimes frantic – efforts to add “new policy” to the “last legislative train leaving the station”).
- Analysis: This year’s end-of-the-year legislative Kabuki dance wasn’t as exciting – and impactful – as prior year end-of-year legislative exercises. For example, there was NOT a lot of drama over funding the government. In other words, there was no real government shutdown-showdown like we have seen in year’s past. With such a divided electorate – evidenced by the recent mid-term election results – neither the Democrats nor Republicans wanted to get blamed for shutting down the government, as campaigning for the 2024 elections has already gotten underway (yes, even though the 2024 elections are 2 years away, BOTH parties have started election and re-election campaigns, especially because 2024 is another pivotal Presidential election year). Also, there wasn’t much in the area of “new” health care policy. For example, unlike 2020, when we saw the enactment of the No Surprises Act (which as you know, included the Federal surprise billing protections and the NSA’s “transparency” provisions), which was – and continues to be – hugely impactful on health care payers and providers, the only real noteworthy changes to the law were scheduled Medicare payment cuts for doctors and established rules for making Medicaid redeterminations. Congress also extended certain flexibilities for tele-health coverage (which I will explain more about below).
Medicare Payment Cuts
- On the Medicare payment cuts, Congress had already agreed to cut Medicare reimbursements to doctors (taken together, these cuts amounted to a 4.5% reduction in payments). This scheduled 4.5% payment cut was put on hold due to the COVID pandemic, but come Jan. 1, 2023, these cuts were scheduled to finally take effect.
- Analysis: Interestingly, Congress did NOT simply extend the delay on the 4.5% payment cut outright. I say “interestingly” because – at least from my perspective – I thought Congress would “kick-the-can” yet again. BUT, Congress did slow-roll the cuts by calling for only a 2% reduction for 2023, then increasing to a 3.25% payment cut in 2024.
- The biggest news coming out of the end-of-the-year legislation was an agreement on a hard-and-fast date for requiring States to start their redeterminations on Medicaid eligibility.
- Analysis: You have heard me – and others – talk ad nauseam about what the END of the COVID Public Health Emergency (PHE) will mean for those individuals (1) who are enrolled in Medicaid and (2) who stayed on Medicaid during the COVID pandemic (even though they earn too much to be Medicaid-eligible) because the State in which these beneficiaries lived were barred from redetermining their eligibility while the PHE is STILL in effect. As stated, once the PHE ends, States MUST commence with eligibility redeterminations, which HHS and outside organizations estimate could result in double-digit millions of beneficiaries losing their Medicaid coverage. It is important to note that one of the main concerns about (1) the END of the PHE and (2) the commencement of the Medicaid eligibility redeterminations is that it creates a “cliff,” where current beneficiaries have to generally drop off the rolls all at once, although HHS has already told States that they can execute their redeterminations over a 12-month period AFTER the official END of the PHE. BUT, HHS’s so-called “off-ramp” announcement wasn’t necessarily good enough for BOTH Democrats and Republicans. For example, Republicans want to start unwinding this COVID-based Medicaid coverage (1) as soon-as-possible and (2) as of a hard-and-fast date. In short, Republicans do NOT want to wait – and be victim to the whims of the Biden Administration – when it comes to WHEN this unwinding of Medicaid coverage MUST begin (for example, while I – and others – expect that the PHE will end mid-April, there’s NO guarantee of that, and the ultimate decision rests with President Biden and his advisers). For Democrats, they wanted to codify this 12-month redetermination period and solidify the requirement that States can slowly-but-surely pick beneficiaries off of the Medicaid rolls upon eligibility redeterminations. The result here (some would call a compromise) is arguably a win-win for BOTH political parties. BUT, this bi-partisan agreement was really driven by $$$. That is, Democrats and Republicans needed $$$ to pay for things like slow-rolling the Medicare payment cuts, also paying for Medicaid coverage expansion for mother’s with newborns championed by Democrats, and the tele-health coverage flexibilities which BOTH Democrats and Republicans wanted. Sooooooo, by starting the Medicaid redeterminations as of a hard-and-fast date (here, April 1st), this saved the government $$$ because the Congressional Budget Office (CBO) actually assumed that the PHE will END as of mid-July (not mid-April), so the government will be spending LESS $$$ on Medicaid because FEWER beneficiaries will be on Medicaid due to the redeterminations starting earlier than CBO expected.
Tele-Health Coverage Flexibilities
- Speaking of tele-health coverage flexibilities:
- Analysis: Under current law, if tele-health coverage is offered alongside a High-Deductible Health Plan (HDHP), the HDHP-plan participant is INELIGIBLE to contribute to a Health Savings Account (HSA). The COVID Stimulus Package – enacted in early 2020 – waived this prohibition for the duration of the PHE, and Congress followed up with waiving this prohibition for 151 days AFTER the official END of the PHE. Employer groups and other stakeholders have been advocating – for a while now – for a PERMANENT extension of this Telehealth HDHP/HSA Waiver. Although Congress did NOT agree to a PERMANENT extension of this Waiver this time around, Democrats and Republicans DID AGREE to a 2-year extension (through 2024), which is actually longer than what the employer community expected Congress would do in this end-of-the-year legislative package. Notwithstanding this 2-year extension, efforts to convince Congress to agree to a PERMANENT extension of this Telehealth HDHP/HSA Waiver will CONTINUE over the next 2 years.
Prescription Drug Reports: Good Faith Effort Penalty Relief & 35 Day Deadline Extension
- Conveniently (rather, INCONVENIENTLY), the Federal Departments released guidance on Christmas Eve eve (i.e., Dec. 23rd) relating to the Prescription Drug Reports.
- Analysis: While the timing of the guidance release was NOT welcome by stakeholders (due to the start of the holidays :[), the Departments’ pronouncements in the guidance WERE welcome (because stakeholders have struggled to understand this complicated information filing requirement, prompting stakeholders to ask the Federal Departments for some much-needed flexibility, which the Departments obliged :]). The Dec. 23rd guidance (issued as an FAQ) granted “good faith effort” penalty relief for errors or omissions in the various data fields that make up the Prescription Drug Reports. In other words, the Federal Departments said that they will NOT impose penalties if a plan sponsor of a self-insured plan and an insurance carrier (along with the service provider(s) that the sponsor/carrier contracts with to submit the Reports on the sponsor’s/carrier’s behalf) fail to include ALL of the required health care and prescription drug information in the Reports, so long as the plan sponsor/carrier undertakes a good faith, reasonable interpretation of the regulations and the government-issued Instructions.
- Remember, while plan sponsors and carriers will be relying on service providers to submit the Reports on their behalf, the plan sponsor and carrier are ultimately liable for any non-compliance. The FAQ also pushed back the already delayed Dec. 27th deadline for submitting the “initial” Prescription Drug Reports. Here, the NEW deadline is Jan. 31, 2023, and the Departments effectuated this deadline delay by announcing that plan sponsors and carriers will NOT be considered to be out of compliance if a sponsor/carrier makes a good faith effort to submit their initial Prescription Drug Report by Jan. 31st. Note that I said “the already delayed Dec. 27th deadline” because the original deadline for submitting the “initial” Reports was Dec. 27, 2021. BUT, in August of last year, the Departments pushed the original 2021 deadline to Dec. 27, 2022. AND now, the deadline is being pushed YET AGAIN to Jan. 31, 2023, although sponsors/carriers are/were STILL allowed to submit their Reports on Dec. 27, 2022.
Surprise Medical Billing Arbitration Process & Increased Non-Refundable Admin Fees
- On Christmas Eve eve (i.e., Dec. 23rd) the Federal Departments ALSO released guidance updating and increasing the non-refundable administrative fee that MUST be paid by BOTH the initiating and non-initiating party when a payment dispute is submitted through the Federal Portal.
- Analysis: As I mentioned to you in my November update, the Federal arbitration process is not running particularly smoothly. First, the number of disputes that have been run through the Federal Portal so far is about 3X to 4X higher than what the Federal Departments initially anticipated. This super-high volume is leading to a pretty big back-log of disputes. This super-high volume is also making it difficult for the certified Federal arbiters to do their job effectively. What I mean here is this: As you know, the Federal arbiters are required to make a final payment determination based on the information presented by the payers and providers to the arbiters. This includes (1) the Qualifying Payment Amount (i.e., the median in-network rate for the disputed medical item or service) and (2) any “additional information” submitted by the provider. Importantly, the Federal arbiter is ALSO required to determine whether a dispute is even eligible for the Federal arbitration process in the first place. Unfortunately, due to the super-high volume of disputes – coupled with the fact that there is a decent amount of work that must go into determining whether a dispute is eligible for Federal arbitration or not – the Federal arbiters are often times skipping over their required responsibility here, and making a final payment determination on disputes that were INELIGIBLE to begin with. In response to this systematic problem, CMS has beefed up staff responsible for administering and monitoring the Federal arbitration process to – as the Departments have explained – conduct pre-eligibility reviews by “researching” specific disputes and even “performing outreach” and “identifying and obtaining information necessary for [the Federal arbiters] to determine eligibility.” The Departments go on to explain that: “This outreach may involve collecting information on the details related to state/federal jurisdiction, correct batching and bundling, compliance with applicable timelines, completion of open negotiations, and other issues relevant to eligibility.” Importantly, CMS confirmed in this Dec. 23rd guidance that the agency has ALSO hired a government contractor to assist CMS staff in conducting ALL of the work associated with the “pre-eligibility reviews.” And based on this fact, this Dec. 23rd guidance informs providers and payers that due to (1) the rising volume of disputes and (2) additional expenditures associated with the Departments’ enhanced role in conducting pre-eligibility reviews (which includes paying a government contractor to help), the Departments have no other choice but to increase the non-refundable administrative fee from the current $50 up to $350 starting Jan. 1, 2023. It is unclear whether this increased-$350 administrative fee will discourage providers and payers from initiating the Federal arbitration process in the first place (which would at least slow down the number of disputes filed, and would allow CMS and the Federal arbiters to “catch up” on the current back-log). Logically speaking though, it is reasonable to speculate that things will slow down. In addition, it is unclear whether the newly hired government contractor will help smooth out the process of determining whether a dispute is eligible for Federal arbitration to begin with. Again, logically speaking, one would think this will help, but only time will tell…
Electronic “Prior Authorization” Proposed Regulations
- In early December (which is somewhat old news now, but still noteworthy for the reasons discussed below), HHS released proposed regulations REQUIRING prior authorizations to be transacted and communicated through electronic means.
- Analysis: While this new requirement is NOT effective until Jan. 1, 2026 – as Ron Burgundy would say – it’s kind of a big deal. Why? Because the Federal government is leveraging technology to fix a bottleneck for providing care to patients, which has continuously been a problem for patients, and frustrating for payers and especially providers. In addition, the Biden Administration is continuing to build on the Interoperability Rules that were issued by the Trump Administration back in 2019 and 2020 by requiring payers to use the Fast HealthCare Interoperability Resources Application Program Interface (FHIR API) to exchange prior authorization-related information. In addition (which is why I wanted to highlight this here), these proposed rules are MORE THAN just leveraging technology to streamline the prior authorization process. For example, in an effort to support the move toward a value-based health care system, HHS is requiring payers to build a Provider Access API to share patient data with in-network providers. HHS is also proposing to allow payer-to-payer data exchanges. Here, with the consent of the patient, payers can securely exchange patient data with each other when a patient changes health plans. Please note, these new requirements to use electronic means to communicate information will ONLY apply to Medicare Advantage and Medicaid plans, and they also MUST be used by insurance carriers selling ACA Exchange plans. These rules are currently NOT applicable to employer-sponsored plans…at least NOT YET (which is another reason why I wanted to highlight this here, because I believe efforts will be undertaken over the next few years to encourage – and possibly even require – private-sector employer plans to exchange patient and other health care data electronically through the use of APIs, etc.).
A Look Ahead on Health Care Policymaking
A March Toward a Value-Based Care Health Care System
- As I also mentioned in my November update, now that we know we will have “split government” for 2023 and 2024, get ready for an onslaught of guidance and regulations from the Biden Administration over the next 2 years. Below this post is what I said back in November. BUT before you get to that, let me FIRST say this:
- Analysis: Just like efforts to “repeal and replace” the ACA finally fizzled out, I believe that “the push” for Medicare-for-All is similarly dust-in-the-wind. Why? Because the mid-term elections have once again foiled a political party’s base’s #1 priority. What I mean here is this: In the case of Republicans – when they controlled ALL of Washington, DC back in 2017 and 2018 – priority #1 for the base was “repealing and replacing” the ACA. Republicans proceeded to try – but in the end failed – to do just that. Then, the 2018 mid-term elections happened. The Republicans lost control of the House, resulting in “split government.” Bye-bye ACA “repeal and replace.” Fast-forward to 2020 (actually Jan. 5, 2021), when the Democrats found themselves in control of ALL of Washington, DC, at least for 2021 and 2022. The Democratic base believed that they now had a virtually-once-in-a-lifetime chance of getting Medicare-for-All into the law, even despite incoming President Biden’s aversion to this type of government-run health system. Although Democrats were AT LEAST able to require the Federal government to negotiate the price of prescription drugs purchased by Medicare, the 2022 mid-term elections happened. The Democrats lost control of the House, resulting in “split government.” Bye-bye Medicare-for-All. I don’t think I need to drone on more on my observations here, so let me put a pin-in-it by saying this:
- No one knows what is going to happen in the 2024 Presidential election, but it is fair to say that we could have a Republican President where ACA “repeal and replace” is NOT a priority – OR – we have a re-elected President Biden or more moderate-leaning Democratic President who will NOT be pursuing Medicare-for-All or even other “shades of single-payer.” In either case, I believe that the next Administration will continue to march toward a value-based care health care system. The Trump Administration started moving us in that direction with things like the Interoperability and Transparency Rules. And – at least in my opinion – it is evident that the Biden Administration is moving us in that direction with, for example, the Administration empowering CMS’s CMMI to develop various value-based care payment and contracting models for Medicare and Medicaid, along with things like the electronic prior authorization rules (discussed above). I also believe that the incoming Congress will be able to find some consensus around value-based care health care policies. There is definitely bi-partisan support to build on things like the CURES Act (with CURES 2.0), and we are seeing/saw bi-partisan support on things like expanding tele-health. There is also bi-partisan support for other value-based care strategies that employer-sponsored plans have been incorporating into their benefit offering for years now, including shared-risk models, bundled payments and establishing “Centers of Excellence” programs, reference-based pricing, direct-contracting, and the continued use of transparency tools. I’m not sure if we will see any bi-partisan value-based care-related legislation pass in 2023 and 2024, but you can never-say-never. BUT, I definitely believe that this incoming Congress will be talking about value-based care and moving the value-based care-ball-further-down-the-field throughout 2023 and 2024, which future Congresses and/or Administrations can build on. Last comment: I highlight value-based care here – and I also note that the Biden Administration will be issuing a lot of guidance/regulations throughout 2023 and 2024 – because I believe that one of the first major health care policy pronouncements from the Administration in 2023 will be from CMMI, where – come mid-January – CMMI will be responding to the White House’s October Executive Order and “recommending” new value-based care payment, contracting, and delivery models – including shared-risk models – to lower the cost of prescription drugs, lower out-of-pocket costs for prescription drugs, and promote access to prescription drugs for Medicare and Medicaid beneficiaries. Stay tuned…
FROM MY NOVEMBER UPDATE, SENT ON 11/18/22
Get Ready for LOTS of Regulations from the Biden Administration
- With limited legislating over the next 2 years, buckle up as the Biden Administration churns out regulations and guidance promoting and implementing Democratic policy priorities in the following areas (please note, this list is NOT exhaustive, as there will likely be other areas where we see regs and guidance):
- Drug Pricing: As you know, the recently enacted Inflation Reduction Act (IRA) included drug pricing reforms that HHS needs to implement. So here, we will be sure to see regulations and guidance implementing these provisions, including (1) the “inflationary caps” (which are effective starting in 2023), along with (2) the $35 cap on monthly cost-sharing for insulin products covered under Medicare Parts B and Part D (which is also effective starting in 2023). Work on the Medicare price negotiations requirement will begin in earnest as well because HHS must, among other things, identify the highest costing drugs that Medicare purchases so the Department can select the first 10 drugs the prices of which will be negotiated starting in 2026. Also, because lowering prescription drug prices is a priority for the Biden Administration, we should also expect to see regulations and guidance that go beyond merely implementing the IRA’s drug pricing reforms. For example, we could very well see guidance requiring more transparency of drug pricing and rebates, and we could even see certain disclosure requirements imposed on Pharmacy Benefit Managers (PBMs).
- Transparency of Medical Prices and Out-of-Pocket Expenses: Although the requirement to disclose in-network rates and out-of-network allowed amounts through machine-readable files on a public website was effective last July (i.e., July 1, 2022), I would expect guidance improving and clarifying specific aspects of this requirement to make it easier for insurance carriers and self-insured plans to comply, and to ensure that the publicly disclosed data is meaningful, understandable, and consumable. In addition, the Transparency in Coverage (TiC) Rule’s “Cost-Sharing Liablity Tool” is effective Jan. 1, 2023 and also Jan. 1, 2024, and while the TiC Rule itself was issued back in 2020, I would expect to see clarifying guidance and FAQs that will help stakeholders better understand how to operationalize this disclosure tool. I also expect the Federal Departments will seek to issue proposed regulations coordinating the Cost-Sharing Liability Tool regulatory requirement with some of the statutory “transparency provisions” of the No Surprises Act (e.g., the No Surprise Act’s Price Comparison Tool and Advanced Explanation of Benefits (AEOB) statutory requirements COULD and SHOULD be combined with the Cost-Sharing Liability Tool regulatory requirement).
- The “Transparency Provisions” of the No Surprises Act: Speaking of the “transparency provisions” of the No Surprises Act, there is no doubt in my mind that – in 2023 – we will finally see regulations and guidance implementing the AEOB requirement, along with the requirement to improve and update provider directories. We should also see additional guidance relating data-sharing/allowing plan sponsors to access their own data from owners of provider networks and the new broker disclosure rules. In addition, the Prescription Drug Reports (which must include information on health care spending, premium payments, covered lives, along with prescription drug spending and rebate data) will continue to vex insurance carriers, self-insured plans, and their service providers, so we will see ongoing technical support and clarifying guidance on this requirement. The Federal Departments will also be releasing a “report” analyzing all of the data submitted in the Prescription Drug Reports, including spending trends and information on the types of drug rebates and discounts PBMs offer to carriers and plans.
- Surprise Medical Billing: We will also see more guidance on the surprise billing protections in the form of FAQs and other clarifying guidance. Also, the final surprise billing regulations issued back in August 2022 only finalized certain aspects of the Interim Final Rules issued back in 2021. So, we will likely see more regulations finalizing other aspects of the surprise billing protections. Some of this guidance will be driven by the ongoing litigation in this area. Also, it’s not like the Federal arbitration process is running particularly smoothly. 2 of the 10 certified Federal arbiters stopped considering disputes because they were losing money, but 3 new Federal arbiters just got certified (so the count is back up to 11). And, as more than 100,000 disputes have been run through HHS’s Federal Portal so far, some of these Federal arbiters are either behaving badly or they are so overwhelmed that they are rendering rulings in error. Providers are also purposefully or negligently failing to provide proper claim numbers to payers so payers can’t even identify the disputed claim. And some payers are playing games with how they are calculating their Qualifying Payment Amount (QPA). In my opinion, something’s gotta give here, and some sort of guidance needs to be issued reigning-in some of these problems
- Value-Based Purchasing: We will also likely see guidance released from HHS’s Center for Medicare and Medicaid Innovation (CMMI) relating to, among other things, value-based contracting and purchasing of prescription drugs, along with mandatory shared-risk models. While CMMI’s efforts will be focused on Medicare and Medicaid, CMMI will be incorporating into their models and value-based contracting standards strategies that private-sector health plans utilize. Also, private-sector health plans will benefit from some of CMMI’s shared risk models as care is coordinated among all health care payers. Please note, nothing significant is going to happen over-night. BUT, the fact that the Biden Administration is embracing private-sector solutions through valued-based care strategies – as opposed to moving more toward government-driven price-setting – is noteworthy.
- Mental Health: Also expect a continued focus on mental health and compliance with the mental health parity requirements. This will likely include requests for an insurance carrier’s or self-insured plan’s NQTL analysis (which is a report comparing various restrictions and limitations on mental health benefits covered under the plan with the restrictions and limitations placed on covered medical benefits).