Health Care Policy Update

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

California’s Attorney General – and Former Congressman – Xavier Becerra Nominated to Run HHS

As stated, a number of questions are presented with the surprise nomination of California’s Attorney General, Xavier Becerra as Secretary of HHS. Could Mr. Becerra bring a California way of doing health care to HHS? Remember, California attempted to enact a State-based single-payer health care system. Currently, California’s ACA Exchange is an “active purchaser,” and the California Exchange requires insurance carriers to offer “standardized” plans. Also, as a former Congressman, Mr. Becerra was a vocal supporter of a “public option,” and more recently, Medicare-for-All, although it was reported that as Secretary, Mr. Becerra stated that he would follow President Biden’s priorities, which are strengthening the ACA and NOT pursuing Medicare-for-All. Grab your popcorn when the Senate schedules Mr. Becerra’s nomination hearings. There are likely going to be fireworks, regardless of whether the Republicans hold onto the majority in the Senate or not (which we are still waiting to find out).
- Analysis: Other questions pop up in my mind: How will a Secretary Becerra approach things like the “interoperability” and transparency regulations? Will there be a greater emphasis on price controls, maybe building on the Trump Administration’s “Most Favored Nation” prescription drug regulations (which pegs the prices Medicare will pay to those Rx prices charged by European countries)? What about value-based care and the continued move toward value-based payments, evidenced by the Trump Administration’s recent modifications to the Stark/Anti-Kickback Law? Let me start by saying this: Mr. Becerra is an Attorney General. Mr. Becerra is NOT a health care policy guy. Yes, Mr. Becerra was a member of the House of Representatives for 24 years, and he was also a member of the Ways & Means Committee, which is one of the House Committees with jurisdiction over health care – BUT – does that make Mr. Becerra a health care policy expert? Also, Mr. Becerra has led the charge in defending the Affordable Care Act (ACA) in the courts, by suing to invalidate a number of health care regulations issued by the Trump Administration relating to, among other things, contraceptive coverage and abortion services, and Mr. Becerra stepped in to defend the ACA from being found unconstitutional when the Trump Administration decided NOT to defend the ACA in court. BUT, do these efforts give Mr. Becerra the requisite health care policy experience? Even if the answers to the above stated questions are NO, it is reasonable to ask this: Does the Secretary of HHS even need to be a person with health care policy chops? After all, heading up a Federal agency is more about “managing” the bureaucracy, not “making policy.” Making policy is left to the Secretary’s advisers. And, Mr. Becerra does have experience “managing” a bureaucracy – the California Attorney General Office, which appears to employ about 4,800 people. That is much smaller than the 200,000+ employees at HHS, but you can’t say that Mr. Becerra does NOT have the requisite experience to “manage” HHS. Let’s get back to the “making policy” question though: If a Secretary of a Federal Department generally does not “make policy” – rather the Secretary’s advisers do – who will be advising Mr. Becerra? Well, it is reasonable to suggest that Mr. Becerra may bring in some advisers from California, his home State. If so, will they come from the California Attorney General Office? If so, do they really have any health care policy experience? Probably not, other than fighting legal battles involving the ACA. What if Mr. Becerra brings in advisers like Peter Lee from the California Exchange? Or, Mary Watanabe who is the Director of California’s Department of Managed Health Care, or the Secretary of California’s Health & Human Services Agency, or the Director of California’s Department of Health Care Services? Or, any other senior official in any of these California Departments/California Exchange? Will this bring a California way of doing things to HHS, meaning, will a Becerra-led HHS tack to the left to pursue more government-driven policies like we are currently seeing in California? Maybe. BUT – like you – I am seeing a pattern with all of the officials making their way into the Biden White House and other senior Leadership roles. Most of them are former Obama Administration officials. Which makes sense. After all, President Biden was Vice President during the Obama Administration, so Biden knows these advisers. And, of course, President Biden is going to want to surround himself with people he knows. BUT, will this “pattern” of former Obama officials making their way into the Biden White House extend to the “political” appointees (a.k.a, advisers to the Secretary) who will start populating the Federal Departments, including HHS? I believe the answer is YES. If former Obama officials will primarily be the ones advising Mr. Becerra (should Mr. Becerra’s nomination be approved by the Senate), then will a Becerra-led HHS tack to the left to pursue more government-driven policies like we are currently seeing in California? Probably NOT. In my opinion, the former Obama officials who will populate a Biden HHS feel there is unfinished business when it comes to the implementing the ACA, and they also want to shift Department’s focus back on to the beneficiaries of the ACA (i.e., Medicaid-eligible individuals and low- to middle-income individuals who are subsidized through the “individual” market ACA Exchanges), which is consistent with President Biden’s priorities that were articulated during the campaign. Sooooo, in summary, I believe a Biden HHS (regardless of who is Secretary) will be implementing the ACA with a center-left policy view of the world (similar to what we saw under the Obama Administration), as opposed to a more left-leaning policy focus (which is where many in the Democratic party would like to see the Biden Administration go, especially under a Becerra-led HHS).

What Could We Expect From a Biden HHS, Whether It Is a Becerra-Led HHS or Otherwise?

Based on everything I said above, if Mr. Becerra is approved by the Senate as the next HHS Secretary, I do NOT foresee a Becerra-led HHS tacking to the left to pursue more government-driven policies. In truth, it would NOT be easy to tack left even if a Becerra-led HHS wanted to. You really need to change the statute to substantially move our health care system in a leftward direction, and with a Senate Republican majority or a 50-50 Democratic Senate majority, enacting substantive changes through an act of Congress ain’t happenin’ between now and 2022.
- Analysis: BUT…there are ways to tinker-around-the-edges of the law through regulations, which would turn the ship in a left-ward direction, where a Becerra-led HHS could take baby-steps toward a more government-driven health care system. In some cases, we may see this. In other cases we won’t.

Medicaid: Take Medicaid as an example. Regardless of who ends up being HHS Secretary, we will certainly see the elimination of the Medicaid “work” requirements that the Trump HHS has incorporated into various State Medicaid programs. These “work” requirements in and of themselves have been on thin-ice anyway, considering the legal challenges to the “work” requirements, and some courts agreeing that the “work” requirements are NOT consistent with the statute, and thus unlawful. BUT, is getting rid of the “work” requirements in Medicaid really a leftward tack? NO. A leftward tack would be evident if Medicaid eligibility was expanded in some way or additional Federal funding was provided to the States. BUT, HHS cannot expand Medicaid eligibility or increase Federal funding for the States, that can ONLY be done through an act of Congress. Note, however, States themselves could modify their Medicaid program by, for example, allowing a Medicaid “buy in” (similar to what New Mexico is doing) which is a more government-driven approach to providing health care coverage. A Becerra-led HHS could certainly “assist” a State in effectuating this policy change – BUT – HHS cannot unilaterally require States to create a Medicaid “buy-in” program, so again, no leftward tack, at least not by HHS.

ACA Exchanges: BUT, as I mentioned in my prior updates (see my below update emails), a Becerra-led HHS could push the ACA Exchange markets leftward by allowing the Federal Exchange to become an “active purchaser” in those 30+ States that rely on Healthcare.gov. In this case, HHS could be given the authority to selectively contract with insurance carriers, and also, HHS could have the authority to kick-out an insurance carrier that the Department feels is arbitrarily increasing premiums, and/or failing to promote consumer choice, quality, and value, and/or deviating from mandated “standardized” plan designs. Again, this is how the California Exchange operates. And speaking of “standardized” plans, as I have also mentioned, a Biden HHS (regardless of who is HHS Secretary) will likely mandate that insurance carriers offer “standardized” plans (i.e., plans with a prescribed set of benefits and cost-sharing requirements) through the Exchanges, which would essentially be an effort to replicate what a “public option” plan would look like without the lower reimbursement rates that would otherwise come with a full-blown “public option” that would need to be enacted by Congress. This effort to “standardize” the Exchange plans could be coupled with HHS “assisting” States – through a 1332 Waiver or otherwise – who might want to enact their own State-based “public option.” So here, it’s not like HHS would be requiring lower reimbursement rates for medical providers – because HHS CANNOT do this through regulations – BUT, HHS along with some States could indeed take steps toward a more government-driven health care system by coordinating these Federal and State policy changes together. A left-ward tack for sure.

What About Value-Based Care?

As I have continually said to you, if we really want to lower health care costs in this country, I believe there are only 2 ways to do it: (1) Through a private, value-based health care system or (2) Through a government-driven system with price controls and lower reimbursement rates.
- Analysis: The Trump Administration has taken some BIG steps toward moving our health care system out of fee-for-service and into a more value-based care health care system, evidenced by various programs run through CMS’s Center for Medicare and Medicaid Innovation (CMMI), as well as changes to Medicaid’s delivery payment systems for certain prescription drugs, and the recent changes to the Stark/Anti-Kickback Law that will allow physicians and other providers to design and enter into value-based arrangements and shared risk models without fear of “self-dealing” violations. With a shift in Administrations, it is reasonable to ask: Will a Biden HHS (regardless of who is HHS Secretary) continue to implement these value-based care policy changes? My answer: YES. It is important to emphasize that value-based care shares bi-partisan support. And, value-based care policies were key parts of the ACA in the first place (e.g., the establishment of ACOs and the creation of CMMI). As a result, I believe that Democratic health policy experts who are NOT gung-ho on a government-driven system agree that value-based care is the way to go. And, I believe that many of the former Obama officials who will be populating HHS over the next few months are NOT gung-ho government-driven health care system people, rather they are ACA supporters, including supporters of the ACA’s value-based care policies. Sooooo, I believe that even a Becerra-led HHS will stay the course on most if not all of the value-based care policy changes the Trump Administration has successfully put into the law. Maybe we do NOT see any NEW value-based care policy changes coming out of a Biden HHS. But again, I do not see a Becerra-led HHS tearing down existing value-based care policies. Rather, a Biden HHS (be it Becerra-led or otherwise) will generally take a wait-and-see approach and evaluate how the Trump-era value-based policy changes are panning out.

What About Increasing Transparency?

The Trump Administration has also taken BIG steps to increase transparency of medical prices and the sharing of health claims data.
- Analysis: One of the first steps was issuing the “interoperability” rules, which requires all health plans doing business in Medicare, Medicaid, and through the Federal Exchange to share health claims data and other important information electronically with their planholders/beneficiaries. It is estimated that 85 million people will have access to their health claims information, in addition to the 40 million who already have access through Blue Button 2.0 in Medicare (all part of the MyHealthEData initiative). The Trump Administration also finalized a rule requiring hospitals to post the negotiated rates insurers and self-insured plans actually pay for medical services, along with the cash price the hospital is willing to accept from an uninsured person or in an out-of-network scenario. The hospital community filed a lawsuit to invalidate these regulations, but a District Court upheld the reg, and the Circuit Court – during oral arguments – seemed to favor upholding the reg as well. Sooooo, if the hospital transparency regulation is likely to withstand this legal challenge, will a Biden HHS attempt to re-write the regulation through another rulemaking exercise? Note, the hospital transparency regs are final, so to change them, the Biden HHS would have to go through the entire rulemaking process to change these final regs (e.g., proposed regs changing the existing regs, a public comment period, and then finalizing the new regs). That takes time and effort. In my opinion – along with the opinion of a good friend of mine who I am channeling here – a Biden HHS is likely to wait and see how the Circuit Court rules on the current legal challenge. During this “waiting period,” HHS will listen to ways the hospital community wants the existing regs to be changed. And, HHS will use the ongoing litigation – and the “waiting” – as leverage to get certain concessions from the hospitals in other non-transparency areas as a condition for HHS’s willingness to consider making the hospital-backed changes to the transparency reg. However, even if changes are made at some point in the future, I cannot see a full-scale tear-down of the hospital transparency regs. I think the toothpaste is already out of the tube. BUT, we’ll just have to wait and see if I am right or wrong here. Last is the transparency regulations that apply to “individual” and fully-insured and self-insured “group health plans.” As you may recall, these regulations were finalized right before the Nov. 3^rd election and they require insurance carriers and self-insured plans to disclose their negotiated in-network rates – as well as separately disclosing the net price for prescription drugs covered under the plan – on a public website. The final regs also require insurers and self-insured plans to provide participants with cost-sharing liability information for medical items and services covered under the plan. These requirements have delayed effective dates of 2022, 2023, and 2024, which gives a Biden HHS plenty of time to figure out how the Department might want to change these regulations. Note, just like the hospital transparency reg, this transparency reg is final, meaning any changes must be made through the normal rulemaking process, which takes time and effort. Also, similar to the hospital transparency rule, there is an expectation that there will be a lawsuit filed to invalidate these transparency regs. Soooo, just like how a Biden HHS may use the ongoing litigation over the hospital transparency reg as leverage, the Biden HHS will likely use any legal challenge to this health plan transparency reg as leverage to extract various concessions from the insurance carriers on non-transparency related matters as a condition to listening to changes that the carriers will want made. There is another important factor to consider here: HHS’s authority to develop and implement these health plan transparency requirements are based on statutory provisions included in the ACA itself. Sooooo, if former Obama officials populate HHS like I think they will, I believe these former Obama officials – who are ACA supporters and dedicated to implementing the ACA’s provisions – will have a hard time saying that the Trump HHS exceeded their authority when developing and issuing these transparency regulations. More to that point, HHS’s Office of General Counsel (OGC) went to great lengths in the preamble of these final regulations justifying HHS’s authority to develop and issue the transparency requirements. And, most of the attorneys in OGC are “career” HHS employees. Yes, these “career” employees will have to listen to what the Biden “political” appointees want them to do. BUT, when it comes to interpreting the law, if the “careers” have already opined on how the law should be interpreted, it is going to be hard for the Biden HHS’s newly appointed General Counsel to say that this interpretation of the law was wrong. Especially if the interpretation is grounded in the ACA’s statutory language. Sooooo – based on all of that – I cannot see a basis for a Biden HHS (whether led by Mr. Becerra or otherwise) tearing down these transparency regs entirely. Maybe the Biden HHS undertakes a new rulemaking exercise to water-down some of the disclosure requirements. BUT, I just cannot see full-scale changes unless a court of law strikes down these regs entirely, which is something that I also do NOT see happening. Again, we’ll just have to wait and see if I am right or wrong here.

COVID/Stimulus Update

A Stimulus Package, Maybe??

Well, it looks like Congressional Republicans and Democrats – along with the White House – are finally getting their acts together and FINALLY compromising on a COVID Stimulus Package. Yes, I said “compromise”…SHOCKING, isn’t it!!
- Analysis: So then, what will be included in said Stimulus Package? As I am sure you have read in news articles, the main tenets of the Package will be an extension of unemployment benefits for workers and self-employed individuals; a second-round of PPP loans for certain small businesses and self-employed individuals, along with some other tweaks to the PPP program like allowing a tax deduction for PPP-related expenses; liability protections from COVID-related legal claims; additional funding for State and Local governments; and additional funding for COVID testing and equipment. What we don’t know – because I have not seen any language yet – is whether there will be an extension of the requirement for insurance carriers and self-insured plans to provide free coverage for COVID testing BEYOND the end of the “public emergency” declaration. I would argue that such an extension does NOT need to be made legislatively because the free coverage for COVID testing requirement is tied to the “public emergency” declaration which has been extended 3 times already by current HHS Secretary Azar, and which is scheduled to end on January 21, 2021 (1 day after President Biden’s Inauguration), and which will likely be extended yet again between now and January 21^st either by current Secretary Azar or someone within the Biden Administration (on January 20^th) who will have the authority to announce an extension (because Mr. Becerra’s nominations to be HHS Secretary will NOT be approved yet). Stay tuned…We also don’t yet know whether things like a “surprise medical billing” fix will be added to the Stimulus Package to help pay for the $916 billion (or $908 billion) price tag (depending on which Stimulus Package we are talking about). The more likely outcome is that a “surprise medical billing” fix is added to the end-of-the-year spending bill, which will be the primary legislative vehicle that the Stimulus Package will get attached to, which will also include the annual “Health Care Extenders” (i.e., expiring Medicare and public health-related provisions, including hospital DSH payments) which will need to be “offset” by other proposals that either increase revenue or decrease spending. Importantly, the House Energy & Commerce/Senate HELP Committee “surprise billing” compromise that calls for – (1) a benchmark rate equal to the median in-network rate for a particular medical item or service in a geographic area for health claims up to a specified dollar amount (e.g., $750) and (2) an arbitration process for claims above that dollar amount – raises $20 to $25 billion over 10 years, making it a perfect “offset” to be used for the Health Extenders and/or the Stimulus Package. It is my understanding that Senate Republican Leadership is very much in need of “offsets,” but most importantly, Leadership is viewing a “surprise medical billing” fix as a “legacy” item for Chairman Alexander (R-TN) who is retiring at the end of this Congress (i.e., the end of this year). Soooo, while a “surprise medical billing” fix has lingered for about 2 years now, maybe, just maybe this gets over the finish line before the end of the year. I will believe it when I see it though because new reports are suggesting that “compromise” remains elusive…SHOCKING, isn’t it!!

ACA Exchange Update

ACA Exchange “Open Enrollment” and a New Exchange-Related Proposal

I will try to be brief on this one, although you know “brief” is always tough for me :]
- Analysis: The 2021 ACA Exchange “open enrollment” period ends December 15^th. So far, enrollment is generally staying the same as last year. HHS reports that new enrollees are down a bit, but re-enrollees are up. My explanation for the higher re-enrollment number is this: People who enrolled in an Exchange plan because they lost their job earlier this year due to COVID (through a “special enrollment period”) are re-enrolling in their same Exchange plan because they have NOT found a job yet. I can’t really explain why the new enrollee numbers are down, but I would venture to suggest this: Many of us would think that the new enrollee number would actually be higher than last year because of COVID and job loss. BUT, as I mentioned above, I believe that those people who lost their job and wanted to enroll in an Exchange plan already did, hence the higher re-enrollment numbers. Another reason for the low new enrollment numbers is that people who lost their job have incomes low enough where they are eligible for Medicaid, and thus, these people already enrolled in Medicaid, or they are in the process of enrolling in Medicaid, instead of an Exchange plan. Once we get a final enrollment report from HHS some time after Dec. 15^th, I will try to dig into this more. I also wanted to highlight HHS’s release of the proposed 2022 Notice of Benefit and Payment Parameters (NBPP) regulations the day before Thanksgiving. At this point, HHS is hoping these proposed regs can be finalized before the Administration changes on January 20^th. The 30-day comment period closes on Dec. 30^th, which means HHS, the White House, and OMB will only have 2 weeks or so to review the public comments and ultimately finalize the proposed requirements. It definitely can be done, but it is going to be tight. There is really no margin for error if HHS really wants to get these requirements finalized on President Trump’s watch. I mention the NBPP regs because there is an interesting proposal included in these regs: In short, a State can establish their own State-based Exchange that relies solely on private-sector Web-Broker Entities (WBEs) instead of relying on Healthcare.gov or creating the State’s own State-based Exchange website and public-facing enrollment structure. Not surprisingly, most ACA supporters have cried foul and are panning this particular proposal. I too am an ACA supporter – BUT – I am supportive of this proposal. Why? As I have mentioned to you before, back when the Senate Finance Committee was developing the ACA (in 2009), we actually wanted States to partner with private-sector companies to perform the Exchange functions, provided the State and these private-sector companies met ALL of the specific requirements we laid out in the statute that a State-based Exchange had to otherwise satisfy. Well, politics being politics, once the bi-partisan Senate Finance Committee deliberations were no more, this idea was abandoned, and the Exchanges were set up to be much more government-driven. I give you that background to say this: In my opinion, the 2022 NBPP proposal is saying virtually the same thing we were saying back in 2009 and that is: So long as a State meets ALL of the Exchange requirements under Section 1311 of the ACA (and corresponding regulations), a State can rely on a private-sector company to perform the Exchange’s enrollment functions. In NO WAY is this proposal saying that a State can shirk the ACA’s requirements. More importantly, in NO WAY is this proposal allowing States and their private-sector partners to enroll people in non-ACA-compliant plans. That is NOT how the law works people. The law currently REQUIRES these private-sector companies to display ALL of the Exchange plans that people who are subsidy-eligible can enroll in. Existing regulations (developed by the Obama Administration) ALSO allow these private-sector companies to offer off-Exchange plans that non-subsidy-eligible people can enroll in. BUT, these existing regulations REQUIRE the display of these off-Exchange plans to be SEPARATE from the subsidy-eligible on-Exchange plans. AND, existing law does NOT allow these private-sector companies to display non-ACA-compliant plans. Opponents of this proposal suggest that States and these private-sector companies are going to offer people short-term health plans and/or other non-ACA-compliant plans. Ummmm, NO. Again, this new requirement – and existing law – does NOT allow that. More on this in my next update.