Health Care Policy Update

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

1% Chance??

In my last update (see below), I suggested that there is a 1% chance that the “enhanced premium subsidies” will be extended before Nov. 1^st. I received a couple of questions asking why I think the chances are so low. So in response, I wanted to provide some detail on my thinking.

Analysis: So again, why 1%?? 3 words: The “Reconciliation” Process. What!?! It is important to understand that the ONLY way the “enhanced premium subsidies” can be extended is through the “reconciliation” process. That is because virtually ALL – if not ALL – Senate Republicans oppose extending the “enhanced premium subsidies.” And, while virtually ALL – if not ALL – Senate Democrats want an extension of at least 1 year, the ONLY way to get ANY extension is to include said extension on a “reconciliation” bill (because Democrats ONLY need a simple-majority of 51 votes to pass said “reconciliation” bill). Okay, so now that you know that the ONLY pathway to an extension is through a “reconciliation” bill, it is important to remember that passing any provision through the “reconciliation” process is really, really, really difficult. For emphasis, I will add 1 more REALLY DIFFICULT.

Why is it so DIFFICULT? First, “reconciliation” bills NEVER include ONLY ONE, SINGLE provision. Instead, “reconciliation” bills ALWAYS include MULTIPLE changes to the law. As a result, for those Congressional Democrats who would LOVE to simply pass a “reconciliation” bill with ONLY an extension of the “enhanced premium subsidies,” that is NOT going to happen. Now, I don’t need to remind you that when members of Congress – including members of the same political party – are trying to agree on MULTIPLE changes to the law through any legislation (let alone a “reconciliation” bill), there are going to be DISAGREEMENTS/INFIGHTING/GRIDLOCK that often times DOOMS the legislation from ever getting to the President’s desk (the latest “Build Back Better Act” drama is a case-in-point, as is the failed ACA “repeal and replace” exercise of 2017). Okay, so connecting-the-dots here: (1) If the ONLY way the “enhanced premium subsidies” can be extended is through the “reconciliation” process – AND – (2) If there is NO CHANCE that we will see a stand-alone “reconciliation” bill extending the “enhanced premium subsidies” – AND – (3) If members of the same political party typically CANNOT agree on MULTIPLE changes to the law, that leads you to conclude that there is a low percentage chance of any extension of the “enhanced premium subsidies” happening.

But Why 1%?

It relates to the reason I discuss below, and it is also associated with the reasons discussed above.

Analysis: As I have told you, every word included in a “reconciliation” bill must be vetted through the Senate Parliamentarian, and the Parliamentarian MUST give the language a “green-light” before the language can actually be voted on. Often times, the Parliamentarian says NO to specific aspects of a “reconciliation” bill, concluding that the language violates the “reconciliation” rules (the proposed Minimum Wage increase in the “American Rescue Plan” is a case-in-point, as is the Immigration Reforms that Congressional Democrats wanted to include in the “Build Back Better Act”). Then, when the Parliamentarian says NO – and when specific aspects of a “reconciliation” bill get bounced by the Parliamentarian – members of the same political party have renewed DISAGREEMENTS/INFIGHTING/GRIDLOCK over what the remaining language in the “reconciliation” bill should look like. AND, these DISAGREEMENTS/INFIGHTING/GRIDLOCK often times lead to ZERO happening. Sooooooooo, that is all a long way of saying this: Notwithstanding the fact virtually ALL – if not ALL – Congressional Democrats and other outside stakeholders (like the Directors of various State-based Exchanges, consumer groups, and even in the insurance carrier community) are turning-up-the-volume on the NEED to extend the “enhanced premium subsidies,” the above stated reason – plus the reasons articulated in the previous post – leads you to not only conclude that there is a low percentage chance of any extension happening, but you can easily get to 1%. Last comment: Yes, there are reports that Sen. Manchin (D-WV) and Senate Majority Leader Schumer (D-NY) are “having positive discussions” about a “reconciliation” bill that includes (1) Climate Change Reforms, (2) Drug Pricing Reforms, and (3) Provisions to Reduce the Deficit. BUT, we do NOT know whether an extension of the “enhanced premium subsidies” will be added to this Package. And MORE IMPORTANTLY, we do NOT know if all 50 Democratic Senators – plus 218 members of the House – will vote YES on the 4-corners of (a) what Sen. Manchin and Sen. Schumer agree on (for example, will it be enough for Progressive Democrats?) and (b) what the Senate Parliamentarian “green-lights” (for example, will it be Swiss-cheese?). Stay tuned as Congress is back in session until July 1^st, so you will be hearing more about this over the next 3 weeks.

Transparency Update

July 1^st Is Less Than a Month Away

Are insurance carriers and self-insured plans ready to disclose their in-network (INN) rates and out-of-network (OON) allowed amounts on a public website through “machine readable files”?

Analysis: We are only 22 days away from July 1^st (that’s counting weekends, plus the 1^st itself). That’s PRETTY, PRETTY soon (Curb Your Enthusiasm fans :]). From what I am hearing, it sounds like insurance carriers are in a good place when it comes to meeting the July 1^st deadline and posting all of their INN rates and OON allowed amounts on “machine-readable files.” Self-insured plans, on the other hand, there’s been some struggles. I will touch on self-insured plans below. But before I do, here is another important question to ponder:

Will we see non-compliance among insurance carriers and self-insured plans? I am NOT talking about inadvertent errors or omissions (because it is reasonable for there to be mistakes because everyone is still trying to figure out what the rules say; interpretations of the requirements vary; and in some cases, carriers/plans just don’t have the necessary information). I’m talking about blatant disregard for the disclosure requirements – OR – carriers/plans taking a page out of the hospitals’ book and “burying” the pricing information deep within the carrier’s/plan’s website (such that end-users have a super hard time even locating the pricing information)). Let me expand on this last point below…

Will We See Non-Compliance When Disclosing INN Rates and OON Allowed Amounts?

Well, when it comes to the “Hospital Transparency Regulation” – which was effective Jan. 1, 2021, requiring the public disclosure of a hospital’s gross charges, cash-price, and payer-negotiated rates – non-compliance among hospitals was, and still is, rampant. This prompted HHS to increase the penalties for non-compliance to up to $2 million per year (depending on the size of the hospital) in hopes that such an increase in penalties would actually prompt compliance.

Analysis: Recent reports indicate that HHS is FINALLY imposing some monetary penalties (instead of just sending out “warning letters”), but there has only been a few hospitals that have gotten dinged with monetary penalties so far. Much of the non-compliance among hospitals was/is in the form of a blatant disregard for the new disclosure requirements (i.e., the hospitals did NOT even try to comply). Most hospitals still think that the penalties are low enough where they would rather pay $$$ over to the Federal government instead of giving their competitors a window into their pricing/negotiation practices. BUT, some of the non-compliance was/is ALSO in the form of “burying” the pricing information. When I say “burying,” I mean hiding the information deep within the hospital’s public website where it is virtually impossible for anyone to dig through all of the various links and web-pages within the website to ultimately find the “machine-readable files” with the pricing information. And then, the “machine-readable files” were such a mess that not even the most proficient expert with a deep understanding of the Hospital Reg requirements could decipher what the information set forth on the file said/meant.

This brings me back to my question above, stated slightly differently:

Will we see non-compliance among insurance carriers and self-insured plans where carriers/plans take steps to “bury” their “machine-readable files” deep within their own public website, making it super difficult for anyone to find the INN rates and OON allowed amounts?

My Answer

In general, NO, I do NOT think that the majority of insurance carriers and self-insured plans out there will “bury” their “machine-readable files” by requiring end-users to go through multiple “clicks” before the end-user can get to the pricing information. BUT, I do believe that there will be some carriers who still do NOT want to publicly disclose their pricing information, and who will likely engage in this practice.

Analysis: I am in NO WAY trying to disrespect insurance carriers here. Again, in general, I foresee compliance among carriers. BUT, I can’t help to think that there are some carriers out there who – like the hospitals – would rather pay $$$ to the government instead of giving their competitors a window into their pricing/negotiation practices. My thinking here is driven by the fact that while the carrier community supports increasing the transparency of medical prices, the carrier community has long-argued that such disclosure should ONLY be between the carrier and their policyholders (i.e., the disclosure should be a direct line between the carrier and the policyholder). Carriers do NOT want to make public the prices that they negotiate with medical providers for ALL to see, especially their competitors. So again, driven by a desire to make it that much more difficult for a carrier’s competitors – and to make it difficult for, for example, researchers who may be crunching the data for these competitors – it would NOT surprise me at all if we hear stories about some carriers “burying” the pricing information.

I would be remiss if I didn’t counter my above stated comments by saying this:

Maybe I am wrong here. Maybe there will be wide-spread compliance, and maybe insurance carriers will NEVER engage in the practice of “burying” the information. This may indeed come to fruition because the penalties for FAILING to publicly disclose INN rates and OON allowed amounts are DIFFERENT than the penalties for FAILING to disclose hospital charges. For example, the penalties for FAILING to publicly disclose INN rates and OON allowed amounts are $100 per day/per violation until the violation is cured. For any insurance carrier out there, non-compliance for only a short period of time would result in LOTS and LOTS of $$$. If we are talking non-compliance for an entire year, that could be waaayyyyyy more than the $2 million penalty that large hospitals face. Soooooooooo, on account of the potential of getting hit with hefty penalties, most – if not all – carriers are likely going to comply and refrain from engaging in practices that HHS may view as non-compliance. Only time will tell which part of my brain is right (and wrong)…

What About Self-Insured Plans?

When it comes to self-insured plans, it appears that a good number of plans – and their Third-Party Administrators (TPAs) – are having trouble determining where the plan’s link to the plan’s “machine-readable files” should be placed.

Analysis: For example, should the link to the plan’s “machine-readable files” be included on the plan’s (or employer’s) own website? Or can the plan’s “machine-readable files” simply be placed on their TPA’s website?

My Answer:

The responsibility for disclosing the INN rates and OON allowed amounts begins and ends with the self-insured plan (i.e., the employer). Yes, the employer can ask their TPA to help the plan put together the plan’s “machine-readable files” with the INN rates and OON allowed amounts specific to the plan. BUT, in the end, the plan is liable for disclosing this pricing information. Soooooooo, I have been telling plans and TPAs this: The link to the plan’s “machine-readable files” MUST be included on the plan’s (or employer’s) website. This “link,” however, can link over to the TPA’s website. And then, the public can access the plan’s “machine-readable files” on the TPA’s website. In other words, the TPA can “host” the “machine-readable files,” and those files can be accessed through the TPA’s website. HOWEVER, a link to the link to the “machine-readable files” MUST be included on the plan’s website (try saying that 3 times ;]).

Anything Else for Self-Insured Plans?

Another issue that is popping up is: Who should put the “machine-readable files” together?

Analysis: Should the plan provide the TPA with the pricing information so the TPA can put together the “machine-readable files” by populating the files with the appropriate information? Or, should the TPA gather all of the pricing information, populate the “machine-readable files” with that information, and then send those files to the plan?

My Answer:

The plan and the TPA have to answer these questions through their own negotiations. For example, if I am a self-insured plan, I would ask/tell my TPA that they have to get all of the pricing information, and that they have to populate my “machine-readable files” for me. Then, send me the link so I can put that link on my website. Maybe I will host my own files. Or maybe I will ask you – the TPA – to host my files, and I will link to your link to the “machine-readable files.” If I am the TPA, I would say, hey plan, I will get all of the pricing information for you, I will populate the “machine-readable files” for you, I will send you the link, and I will host the files if you want me to. AND, I will do all of this for an appropriate fee. Again, at the end of the day, the plan is responsible for disclosing the INN rates and OON allowed amounts. And, a plan can rely on their TPA to help them with some or all of the “machine-readable files.” But what can’t happen is that the plan can’t point to the TPA and say, “you do it,” and the TPA can’t point to the plan and say “no, you do it.” There MUST be coordination between the plan and the TPA. For you plans out there, if your TPA is NOT being helpful, go find a TPA who will be helpful. There are enough of them out there who are willing to help. For you TPAs out there, if there is NO coordination between you and the plan, START COORDINATING or you are going to lose business. Heck, maybe you will pick up more business if you learn the transparency rules and offer to help plans. And to this last point, for you TPAs out there who service small- and mid-sized employers, these self-insured plan sponsors probably have NO IDEA that they have to include a link to “machine-readable files” with INN rates and OON allowed amounts that are specific to their self-insured plan on the plan’s/employer’s website. Do the right thing by telling them about this public disclosure requirement, and help them comply. You can charge them a fee or simply do it for free to show your value.