+1 800.648.4807

Coronavirus Update

Coronavirus Update

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

“Lighting Round”:  Quick Hits on COVID-19-Related Issues

  • Well, a lot has happened since March 12th (when the COVID-19 emergency finally hit-home for everyone): 3.5 Stimulus Packages have been enacted. Millions of people are unemployed due to the halt in economic activity. People impacted by the COVID-19 disruption are trying to figure out where they can obtain health coverage. Concerns have been raised over significant premium increases. We have watched the rise of telehealth. And the debate over “surprise medical billing” rages on. Let’s run through some of what we have been seeing and hearing:
    • Premium Increases: Many in the insurance industry sounded the alarm over the fact that COVID-19 could cause premiums to go up exponentially in 2021 and beyond due to the high cost of COVID-19 testing and treatment. However, while the cost of COVID-19 testing and treatment has certainly increased due to more and more Americans testing positive for the virus and experiencing significant health issues, health care costs associated with certain medical procedures and other health events have fallen off a cliff. So much so that hospitals have lost millions in revenue, forcing these hospitals to lay off hundreds of thousands of health care workers. Primary doctors have also taken a significant hit, in addition to specialists.
      • As a result, although it was once believed that the cost of COVID-19 would increase premiums by 40% (according to the most dire predictions), premiums are NOT likely to increase because the decrease in health care spending in other areas is offsetting the increased costs for COVID-19 testing and treatment. Having said that though, it will be interesting to see what the proposed premium rates for 2021 will actually be when we finally see all of those proposed rates. If the proposed rates are higher than what most would have expected – and if the justification for the higher premiums is COVID-19 – there’s going to be a lot ‘splaining to do.
    • Voluntary Acts By Insurance Carriers and Self-Insured Plans: The 2nd Stimulus Package mandated that fully-insured and self-insured health plans must waive cost-sharing for COVID-19 testing and any services relating to the testing visit.  Members of Congress and others then turned up the heat on insurers and self-insured employers, requesting that they waive cost-sharing for COVID-19 treatment too. In response, most insurance carriers have announced that they are waiving cost-sharing for COVID-19 treatment provided at in-network facilities. Many self-insured employers voluntarily waived cost-sharing too.
      • Importantly (and something that was expected), the House Democrats’ version of a 4th Stimulus package would mandate that fully-insured and self-insured health plans waive cost-sharing for “medically necessary” COVID-19 treatment. Again, most insurance carriers and self-insured employers are already doing this. BUT, not all of them are doing it, so query whether this House proposal will make its way into the Senate’s version of a 4th Stimulus (we will talk more about a 4th Stimulus Package below).
    • Telehealth: Telehealth is now a household name. Not that people didn’t know about it before the COVID-19 national emergency, but telehealth is now EN FUEGO (gosh I miss sports…). Prior to the COVID-19 national emergency, telehealth was already on the rise. BUT, there continued to be regulatory barriers – as well as well-funded opponents of this innovative way of delivering medical care – that prevented telehealth from really taking off. Well, the COVID-19 National Emergency convinced members of Congress and Federal and State regulators to knock down many of these regulatory barriers, at least temporarily.  For example, in the 2nd and 3rd Stimulus Packages, Congress changed the Medicare and Medicaid statutes allowing, among other things, Medicare and Medicaid beneficiaries to stay at home while consulting with a doctor using their smartphones or other electronic devices. In addition, telehealth consults and related services must be fully paid for by these public programs. HHS also added to the flexibility of utilizing telehealth for Medicare and Medicaid in landmark pieces of guidance. Congress also allowed high-deductible health plans (HDHP) to pay for telehealth-related services before the deductible is met (and the HDHP-policyholder will remain eligible to contribute to their HSA).
      • Again, the majority of these changes for telehealth are temporary (because these changes were justified as needed – and necessary – responses to the COVID-19 pandemic). However, once you get something in the law, it is hard to take it out. Supporters of telehealth certainly have their work cut out for them once the COVID-19 disruption is finally behind us. BUT, they have an easier row to hoe now that the rules and regulations have been updated to reflect that fact that we are in the 21st century. And, people – so far – LOVE telehealth.  That is a winning combination for permanency.
      • And, speaking of voluntary acts by insurance carriers and self-insured plan, most of the carriers and self-insured employers are voluntarily waiving cost-sharing for telehealth consults and related services. Another reason why I believe much – if not all – of the legislative and regulatory changes expanding and providing more flexibility for telehealth will stick around once COVID-19 is no more.
    • Surprise Medical Billing: Eliminating surprise medical bills remains a top priority for many members of Congress and the Administration. And, for right or wrong, these members and the Administration are using the COVID-19 National Emergency as means to an end. What mean is this: As you know, bi-partisan surprise medical billing proposals have languished in Congress for about 2 years now due to the “politics” over how much providers and insurance carriers and self-insured plans are going to pay for out-of-network services. With no statutory changes, the Administration is limited in what it can and cannot do from regulatory perspective. However, there is 1 very important tool that any Administration (both Democrat and Republican) has when it comes to instituting a policy change that is not specifically prescribed in statute. That tool is:  “Conditioning” the receipt of Federal funds on specific behavior. Importantly, Congress chose to give hospitals and providers $100 billion in aid through the 3rd Stimulus Package. While implementing the rules for receiving this Federal funding, HHS indicated that hospitals and providers that take the Federal funds are prohibited from sending surprise bills to patients. And viola, an end to surprise billing. Well, not so fast…
      • First, the availability of the $100 billion in Federal funding will end at some point. As a result, so too will this “condition” NOT to balance bill. Also, there continues to be a legal question over whether HHS’s “condition” here applies to COVID-19-related services ONLY or whether this prohibition applies to ALL surprise bills that a provider accepting the Federal funds would otherwise send on non-COVID-19-realted services.
      • Congress can very easily resolve this above-stated question in the 4th Stimulus Package. For example, Congress could simply codify this “condition” in statute, and clarify that the “condition” prohibits ALL surprise medical bills.  Congress could also expand on this temporary prohibition on surprise bills by finally enacting the bi-partisan proposals that have languished for the past 2 years. I will note, the House Democrats’ version of a 4th Stimulus package (which we will discuss later) would “condition” the receipt of Federal funds on NOT sending surprise bills. BUT, that “condition” ONLY applies to COVID-19-related services (i.e., it’s not a broad “condition”).
    • Unemployment During the COVID-19 Chaos: I don’t know if it is just me, but when I read headlines about the exponential increase in the unemployment rate, I can’t help but react this way – OF COURSE we are going to have 30 million people unemployed, we just shut down the economy!! The doom-and-gloom in these headlines is maddening. Look, I am 110% concerned about the increased unemployment rate, and I too think it is bad (and my heart goes out to every person and family who are struggling as a result of being unemployed). BUT, it is common-sense that you are going to have millions of people out of work when there is NO work because everyone is required to shelter-in-place.
      • And look, I am NOT saying that I disagree with the mandatory stay-at-home orders. These are NECESSARY, NECESSARY, NECESSARY. Too many people have died from COVID-19, and without a vaccine, the best deterrent is to make sure the virus does NOT spread. And the ONLY way to make sure the virus does NOT spread is to make sure that people are not around other people.
      • But again, if you are going to say that people CANNOT be around other people, you have to accept that the economy is going to take a significant hit. Which means, you are going to have understand that there is going to be a CRAZY high unemployment rate. Why does the unemployment rate have to be sensationalized the way it is being sensationalized?!?
    • Health Coverage During the COVID-19 Chaos: This brings me to quickly comment on health coverage: About 160 million Americans get their health insurance through their employer. While there are exceptions, a lot of these Americans like their employer plan. Yes, the employer-sponsored system is NOT perfect. And yes, if we started with a clean-sheet of paper, we would probably have a different system through which health insurance is offered to people. BUT, that sheet of paper has already been written on. Erased in many parts, and re-written. We’ve actually added a couple of pages. But the bottom-line is that the employer-sponsored system delivers health insurance to the largest numbers of Americans, so it is the system we have. Employers are trying to make it work. They are trying to help their employees and former employees get through the COVID-19 chaos. I am proud to say that I have been helping many employers do just that. It makes me feel good because while I would LOVE to help EVERYONE, I am only 1 person here.
      • I am also proud to say that I worked on the Affordable Care Act.  My Senate Finance Committee colleagues and I developed the ACA Exchanges. We developed the rules for the “individual” market (both the “subsidized” and “unsubsidized” markets). As a result, for those people who now find themselves unemployed, they now have a somewhat more functional “individual” market if it were not for the ACA. Unfortunately, I believe the ACA’s “individual” market remains dysfunctional – BUT – it is a viable place for people to get health coverage. AND THAT IS A GOOD THING.
      • Look, I am not a Democrat because I am happy about that the ACA’s “individual” market is available to people, especially those who find themselves unemployed. And I am not a Republican because I like the employer-sponsored system better and I wish the “individual” market was less dysfunctional. I am just a person who wants people to have health insurance, and I am trying to make the most of the sheets of paper that make up our health care system. I guess what I am really saying is: Don’t be a hater. There are folks on both sides of that statement, and you know who you are. We all need to come together, because those who are unemployed are not haters. They are people struggling to find some type of health coverage. As stated, there are pretty good – but not perfect – options that are available to them, so let’s help them without denigrating one type of health plan over another.


COBRA and ACA Enrollment

  • My apologies if my comments above are seen as a rant. They are not intended to be. Let’s see what you think about the following: As I have told you before, there are only 2 ways to “subsidize” health coverage for people – (1) Through compensation or (2) Through government spending. Again, if we started with a clean-sheet of paper, maybe this would be different. BUT, this is where we are at.
    • Employer Plans: If health coverage is being “subsidized” through compensation, we are talking about an employer plan.  Here, a person (i.e., an employee) receives an “employer contribution” that pays for about 70% or so of the premiums for the plan. This means that the employee must cover about 30% or so of the premiums out-of-their-own-pocket. The “employer contribution” is compensation to the employee, but no one except for economists and benefits geeks like me think about it that way. Instead, most people – including health policy analysts and the media – only look at the out-of-pocket cost that the employee pays. Now, what happens when a person (i.e., an employee) is laid off or furloughed and they lose their “employer contribution”? Answer: They lose the 70% or so of compensation they were otherwise receiving to help pay for their premiums. In other words, this person loses their “subsidized” employer plan. And instead of just paying 30% or so of the premiums out-of-their-own-pocket, this person would be paying 100% of the cost of the premiums if they choose to “continue” coverage under their employer plan. The media – and even some health policy analysts – call this coverage “prohibitively expensive.”
    • Government-Subsidized Plans: If health coverage is “subsidized” by the government, we are talking about the public health programs (like Medicare, Medicaid, TRICARE), but we are also talking about an “individual” market ACA Exchange plan that is “subsidized” through a so-called premium tax credit (I say so-called because it is direct government spending). Here, the portion of the Exchange plan premium that is paid for by the government subsidy varies depending on a person’s income.  The lower the person’s income, the greater the coverage of the premium cost. Also, depending on the “type” of plan the person purchases will determine how much the government subsidy covers (e.g., if the person purchases a “bronze” plan, the government subsidy may cover 100% of the cost, whereas if a person purchases a “gold” plan, the subsidy may only cover 50% of the cost). According to HHS, the average government subsidy covers 72% of the premium. Importantly, eligibility for the government subsidy stops at 400% of the Federal Poverty Level (FPL). Now, what happens when a person who is receiving a government subsidy earns too much money to continue to qualify for the government subsidy (i.e., their income is above 400% of FPL in a particular year)? Answer: They lose the subsidy that covers 72% (or 100% or 50% as the case may be) of the premiums. In other words, this person loses their “subsidized” individual market plan. And instead of paying 28% (or 0% or 50% as the case may be), this person is paying 100% of the cost of the premiums on their own. How often have you heard the media and health policy analysts say that this type of “unsubsidized” individual market plan is “prohibitively expensive”? Sometimes, BUT NOT TOO OFTEN.
    • COBRA: I torture you with all of that to say this:  In my employer plan section above, I am talking about COBRA coverage for laid off or furloughed employees. According to the law, employers with 20 more employees are REQUIRED to offer COBRA to their laid off or furloughed employees. Soooo, these unemployed individuals ALAWAYS have a health option available to them. Is it “prohibitively expensive” like the media and health policy analysts say it is? Well, yes if you are basing your statement on the fact that a former employee goes from paying 30% to now paying 100% of the cost of the coverage (and, there is a 2% surcharge for administrative expenses). BUT, isn’t an “unsubsidized” individual market plan “prohibitively expensive”? YES. Why? Because a person here is paying 100% of the cost of the premiums with NO help from the government. Why doesn’t the media and health policy analysts explain it this way when talking about how “prohibitively expensive” COBRA is? By their measure, an “unsubsidized” individual market plan is “prohibitively expensive” too. Here is another thing you do NOT hear from the media or health policy analysts: Some – but certainly not all – employers are paying for their former employee’s COBRA premiums on an after-tax basis. In other words, the employer is maintaining their 70% or so “employer contribution” (although sometimes it is less in the COBRA context), which means the former employee continues to only pay 30% or so of the costs. In this case, COBRA coverage is NOT “prohibitively expensive,” is it?? But guess what does remain “prohibitively expensive”? An “unsubsidized” individual market plan for those people making more than 400% of FPL. Back to my point that there are only 2 ways to “subsidize” health coverage, let me end by saying this:  In cases where an employer is NOT making after-tax “employer contributions” to pay for COBRA premiums, people DO NEED help affording health coverage, especially if a former employee makes too much income to qualify for a subsidized Exchange plan. This is why you are hearing members of Congress supporting proposals for the Federal government to fund COBRA premiums. The House Democrats’ version of a 4th Stimulus package calls for a 100% government subsidy for COBRA premiums. When I was on Senate Finance back in 2008, we provided a 65% government subsidy for COBRA premiums. It’s the right thing to do (although 100% is a bit too high in my opinion).

ACA Exchange Enrollment: The Kaiser Family Foundation just released a report estimating that 27 million people who were covered by an employer plan would become uninsured due to job loss (this includes both the employee and their dependents). Out of this 27 million, Kaiser estimates that 8.4 million of them would have income low enough to make them eligible for a government subsidized individual market Exchange plan. It appears that Kaiser also estimates that 5 million of this group will be INeligible for a subsidized Exchange plan (because a family member was offered an “affordable”/“minimum value” employer plan or the person/family earned more than 400% of FPL). The remaining 13 million people would be eligible for Medicaid or ineligible for any type of coverage due to citizenship or other reasons. What I find lacking in Kaiser’s report is an estimate of how many of these 27 million will enroll in COBRA coverage. Again, under the law, EVERY employer with 20 more employees MUST offer COBRA coverage. In my opinion, a strong argument can be made that the 5 million who are INeligible for a subsidized Exchange plan would enroll in COBRA, notwithstanding the fact that they would have to pay 100% of the premiums. Alternatively, these people could enroll in an “unsubsidized” individual market plan. It would come down to which plan is more “prohibitively expensive” than the other. In my opinion, these 5 million would benefit most from a 100% COBRA premium-subsidy. Also in my opinion, if the COBRA premium-subsidy is indeed 100%, the 8.4 million who are otherwise eligible for a subsidized Exchange plan would decide to enroll in COBRA instead of an Exchange plan. Why? Because as stated above, the Exchange-subsidy covers on average 72% of the premium. If you could get a “no-cost” plan through COBRA, wouldn’t you do it?? OF COURSE you would. Which is why I am surprised that the House Democrats – who are such vocal supporters of the ACA – are supporting a proposal that would keep people OUT of the ACA Exchanges instead of IN them.


The House Democrats Introduce Their Version of a 4th Stimulus Package

  • I didn’t leave much room to talk about the House Democrats’ version of a 4th Stimulus package. BUT, here goes: Note, I am going to limit my comments to the “private health insurance” provisions in the package. There are a number of changes to, for example, the Paycheck Protection Program and the tax benefits the 3rd Stimulus Package made available to employers that I would love to talk about. BUT, a discussion of those provisions will unfortunately have to wait.
    • ACA Exchange Special Enrollment Period: The bill would require the Federal Exchange to offer a “special enrollment period” during the COVID-19 National Emergency. The “special enrollment” period would last 2 months, beginning 1 week after enactment of the bill. At the election of the individual, coverage may be retroactive to April 1, 2020. This provision would NOT apply to State-based Exchanges that already offer a “special enrollment period” in response to COVID-19.
    • Additional Funding for ACA Exchange Outreach: $25 million would be dedicated to educational and marketing materials on enrollment in health coverage through an ACA Exchange.
    • Free Coverage for COVID-19 Testing: As you know, the 2nd Stimulus Package required fully-insured and self-insured plans to waive cost-sharing for COVID-19 testing and services related to the testing visit. The House bill makes this requirement retroactive to January 31, 2020, the date on which HHS declared the COVID-19 public emergency.
    • Coverage for COVID-19 Vaccine: The 3rd Stimulus Package provided that once a COVID-19 vaccine is developed and “recommended” as a preventive service, fully-insured and self-insured plans must cover the cost of the vaccine without any cost-sharing. The House bill would require a “recommendation” be made within 15 days of a vaccine being approved.
    • Free Coverage for COVID-19 Treatment: Fully-insured and self-insured plans MUST waive cost-sharing for “medically necessary” COVID-19 treatment, even if a person is never diagnosed as having contracted the virus. The bill directs the HHS, Treasury, and DOL to issue guidance setting forth a list of “medically necessary” medical items and services that are “relevant to the treatment or mitigation of COVID-19” which must be covered by a fully-insured and self-insured plan (again, with no cost-sharing).
    • Beefed Up Notification to Employees: The bill would require employers to provide additional information about health care coverage options to employees who are laid off or furloughed, including information about coverage under an individual market Exchange plan.
    • Federal COBRA-Subsidy: Employers would be required to pay 100% of the cost of COBRA coverage offered to a laid off or furloughed employee. Employers would be reimbursed for “fronting” the COBRA premium by claiming an advance-refundable payroll tax credit for 100% of the cost. The COBRA-subsidy is available for COBRA coverage that started March 1st, and the COBRA-subsidy would remain available through January 31, 2021. Most – including me – agree that that House bill is NOT going anywhere in the Senate. BUT, will some of the provisions in this House bill make its way into the final version of a 4th Stimulus Package? You Betcha. BUT, the $3 trillion dollar question is: What provisions in the House bill will make its way into the final version? My guesses – at least as it relates to the “private health insurance” provisions – are:
    • The Federal COBRA-subsidy will get in, but NOT at 100%. Senate Republicans will want some cost-sharing (similar to what we did back in 2008). I am guessing somewhere between 65% and 75%. Senate Democrats will want cost-sharing too, and they will likely ask the question of why are we subsidizing 100% of the COBRA premium when we want people to go into the ACA Exchanges.
    • The mandate for waiving cost-sharing for “medically necessary” COVID-19 treatment will likely get in.
    • The Federal Exchange “special enrollment” period and the funding for outreach will get in ONLY if Senate Republicans get something for it (i.e., a “horse-trade”). I have some ideas on possible horse-trades, but I will keep my powder dry until I have a better idea of what’s possible and what is not.
    • Lastly, although I didn’t discuss it in my bullet points above (but I did mention it at the beginning of my update), I believe Federal funding for providers will be “conditioned” on the provider agreeing to NOT send surprise bills on medical services relating to COVID-19 testing AND treatment. I doubt there is enough “political juice” to get a blanket prohibition of surprise medical bills during the COVID-19 National Emergency, but you never know…