Health Care Policy Update
Health Care Policy Update
by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
The COVID PHE…Extended Yet AGAIN
- In my last update, I suggested that the Biden Administration would move forward with ENDING the PHE as of mid-January 2023.
- Analysis: I noted that we would know – one way or another – whether the PHE was indeed ENDING or not some time in mid-November. That’s because HHS promised States that the Department would inform them – 60 days in advance – if and when the PHE was ENDING. I speculated that States would likely hear from HHS come mid-November because the “politics” and “the rhetoric” that would flow from ENDING the PHE would NO LONGER be a threat to those Democrats who were trying to get elected on Nov. 8th (that’s because the election would be OVER). Well…it’s mid-November…and guess what?!? NO notification from HHS. This means 2 things: First, I was WRONG. The PHE will NOT be ending mid-January 2023. Second, the PHE will remain in effect for about another 5 months, until mid-April. I suppose the significance of EXTENDING the PHE yet again is not so significant, considering the fact that the PHE is a bit of “old hat” these days. What I mean is, the PHE has been in effect for almost 3 years now (the PHE was first announced in January 2020). Sooooooo, all of us are pretty much used to all of the health care policies that are attached to the PHE. Actually, because we are all so used to the health care policies attached to the PHE, once they go away, it’s going to be a PRETTY PRETTY big shock to our health care system. And everyone knows it. That’s why everyone – including me – has been talking about the PHE and what it will mean once the PHE finally ENDs. BUT, at least for now, we can all stop talking about the PHE. Why? Because it ain’t going anywhere any time soon. HOWEVER, don’t be surprised to see the new House Republican majority approve a Resolution calling for the end of the PHE when the new Congress convenes. BUT, that Resolution will NOT go anywhere in a Democratic Senate, leaving it up to the Biden Administration to decide if the PHE will finally END…whenever that may be (pssssstttt, I’m going with mid-April, but as you know, I’ve been wrong before :]).
Mid-Term Elections Update
How Did Things Shake Out?
- In my last update, I noted that almost every political analyst and pollster [were] guesstimating that the Republicans will take back the majority in the House on Nov. 8th. The biggest open question [was]: How large will the House Republican majority end up being? I also noted that the Senate may or may not flip Republican on Nov. 8th. The biggest open question [was]: If the Senate does flip Republican, will it be 51 or 53 seats? It will all come down to AZ, GA, NV, and PA.
- Analysis: Now that the dust has finally settled on the mid-term elections, here’s what we know: First, the Democrats effectively held on to the majority in the Senate by winning AZ, NV, and PA. At this point, it does NOT matter what happens in GA when the “run-off” election between Ralph Warnock and Herschel Walker is held on Dec. 6th. The outcome of that race will merely tell us whether the Democrats still have only 50 seats, or whether their majority will be at 51. Second, the Republicans will take over the majority in the House of Representatives. However, despite predictions that Republicans could win upwards to 30 seats, currently, Republicans ONLY hold a 6-seat majority, with 7 races that are still yet to be called. The latest vote tallies seem to indicate that Republicans could pick up at least 4 more seats. Regardless of the final count, the House Republican majority will be very narrow, falling short of expectations. Regardless of what we expected – OR – didn’t expect, these final results are noteworthy because this means that we will have “split government” throughout 2023 and 2024 (i.e., Republicans will hold the majority in the House, while the Democrats will hold the majority in the Senate and the White House).
What Are Some Take-Aways from the Election Results?
- First, it is clear that we have an evenly divided electorate. We didn’t see the pendulum swing wildly like we have seen in prior elections.
- Analysis: Second, it appears we have an astute electorate when it comes to the candidates they voted for. For example, the majority of the electorate seemed to signal that they want to move past the rhetoric on both sides, and “candidate quality” mattered. What I mean here is that regardless of party affiliation, a candidate’s character, history, and position on issues were all weighed by the electorate, and then voters voted their conscience. Third, “moderates” in both political parties helped each respective party, but in different ways. For example, a number of moderate House Republican candidates won their races, which effectively helped the Republicans re-take the majority in the House. On the other side, a number of moderate Democrat candidates won, thereby limiting the projected “red wave” to a “red ripple.” Please note, I am NOT suggesting that progressive Democrats lost across the board. Nor, did conservative Republicans lose all of their races. BUT, I am suggesting that – at least in my opinion – if you were a candidate on the far-left of the political spectrum, you lost. And similarly, if you were a candidate on the far-right of the political spectrum, you lost too. For example, most experts consider Stacy Abrams in GA and Beto O’Rourke in TX progressive Democrats. They both lost their bid for Governor, while progressive Senate candidate Mandela Barnes and a number of progressive House candidates also lost. On the other side, those Republican Secretary of State candidates that questioned the 2020 elections all lost. And although former President Trump only endorsed 6 House candidates, those candidates lost. Mr. Trump backed Dr. Oz in PA, Blake Masters in AZ, Adam Laxalt in NV…all lost. Now, I would argue that it is NOT fair to call all of these Senate candidates far-right candidates, but many political experts have argued that their ties to former President Trump had an impact.
Putting My Take-Aways Into Perspective
- Having said all of that, let me say this: I am NOT trying to be political here. I’m just trying to make sense of how things played out on Nov. 8th, and I am trying to identify trends and other noteworthy data points for you. In doing so, I can’t help but to conclude that it appears that we have a moderate electorate out there, and moderate candidates helped out each respective political party in very important ways.
- Analysis: As stated, it also appears that the electorate wants to move past the divisiveness caused on BOTH sides of the political spectrum. And – at least to me – that apparent trend borne out by the mid-term election results will be SUPER important going into the 2024 Presidential election. Will things change over the course of 2 years? Yes, quite possibly. A lot will come down to how the next Congress performs, and also, how the Biden Administration finishes out the last 2 years of their current term in office. For example, with “split government,” will anything get done? Could there be some surprises and we actually see some bi-partisanship? Only time will tell on what the answers to these questions will be. To be sure, the next 2 years – like the past many years – will be SUPER interesting as we embark on another period of time where “split government” will ultimately dictate how things will play out, which will be a vast departure from what we experienced over the past 2 years when Democrats controlled all of Washington.
Even With “Split Government,” Things Will STILL Be Busy on Health Care Policy
- How will things shake out on the legislative-front?
- Analysis: Well, there won’t be a lot of legislation getting signed into law by President Biden. BUT, there will likely be a good amount of legislation passed by the Republican majority in the House on Republican-leaning policy items. In other words, the House will endeavor to lay some groundwork on Republican-leaning policies by holding hearings and then passing legislation on the House floor in a show of support for issues that Republicans will want to pursue if they win back the White House, hold the majority in the House, and take back the majority in the Senate in 2024. These policies will include, among other things, expanding the use the Health Savings Accounts, extending and expanding the use of tele-health, codifying and improving Individual Coverage HRAs (ICHRAs), and permitting small businesses and self-employed individuals to participate in an Association Health Plan. House Republicans will also look to ways to reduce Medicare spending, as the Part A Trust Fund is projected to go insolvent in 2028. Also look for the protection and promotion of the Medicare Advantage program, as almost half of current Medicare beneficiaries are enrolled in some type of MA plan. House Republicans will also go-back-to-the-well on examining ways to re-structure Medicaid into a block grant program or spending on a per capita cap basis. And lastly, Republicans will likely take up some sort of action relating to prescription drugs. House Republicans know they cannot repeal the drug pricing reforms enacted as part of the Inflation Reduction Act. BUT, House Republicans will likely act on legislation advancing their own ideas on how to lower prescription drug costs. House Republicans will also force House Democrats to take some difficult votes on things like repealing taxes on drug makers and limiting the government’s ability to set prices, which could be used against those recently elected moderate Democrats in the forthcoming 2024 elections. With a Democrat majority in the Senate, none of these Republican-leaning policies will go anywhere on a stand-alone basis. BUT, there could be some “horse-trading” over the next 2 years where Democrats agree to certain aspects of these Republican-leaning policies in exchange for Republicans agreeing to certain demands from Democrats. Also, even though we have “split government,” that doesn’t mean that we won’t see some bi-partisan legislation. For example, expanding the use of tele-health enjoys bi-partisan support. Increasing the transparency of medical and drug prices and also increasing the transparency of the amount of money a policyholder/participants pays out-of-pocket has bi-partisan support. Even policy changes relating to Medicare Advantage holds some bi-partisan support. One wild card I see legislatively in 2023 and 2024 is Medicare and Medicare Advantage. Democrats want to protect Medicare and Republicans are supportive of promoting Medicare Advantage. I believe there is a way both parties can get what they want through bi-partisan legislation that makes policy changes to extend the life of the Trust Fund, while also including policies that improve and promote MA plans. Both parties can claim victory.
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 Liablity 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). We may even see increased penalties for failing to comply with the mental health parity rules and additional mental health coverage requirements enacted into law through an end-of-year legislative package that Congress will consider in the upcoming “lame-duck” session before the end of 2022.
Speaking of “Lame-Duck”…
- Congress officially came back into town for the “lame duck” session on Monday the 14th, but now, members have all left DC for the Thanksgiving holiday. Once back on Nov. 28th, Congress has 3 weeks (until Dec. 16th) to come to an agreement on how to keep the government funded.
- Analysis: Some political analysts are suggesting that due to the somewhat unexpected outcome of the mid-term elections, Republican and Democratic Leadership will agree to fund the government through the rest of the 2023 Fiscal Year (i.e., all the way through September 30, 2023). Others suggest that there will only be a short-term extension where the current Congress will kick a potential government shut-down show-down to the next Congress. Only time will tell where things will land. Other than funding government, no one really knows what else both Leaderships will try to include in an end-of-year legislative package. For example, will an end-of-year package include “policy” items? Or, will the package merely include the “must-dos” like extending some expiring Medicare- and Medicaid-related provisions and delaying other Medicare payment cuts. In the interest of time and space here – and considering the fact that NO ONE (including Congressional staff) really knows what will ultimately end up in the end-of-year legislative package – I am NOT going to spend time ticking through what may or may not be included in the package. I will circle back with you in December when we all know more.