Health Care Policy Update

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

You are reading in the news right now that a number of Democrats – including Speaker Pelosi – are more or less demanding that the big-ticket health care policy items I mentioned above be added to this “Human Infrastructure” Plan, known as the “American Families Plan.” You are also reading others who are saying that because these big-ticket health care policy items are NOT included in this initial proposal, that health care is dead, at least for 2021 and 2022 (even though President Biden devoted some of last’s night speech to, for example, drug pricing reform). Here’s how I break things down in my mind:
- Analysis: Let me start by establishing this base-line: Although it is still NOT a 100% certainty that the Parliamentarian will allow the Democrats to pursue 2 more “reconciliation” bills in 2021 (instead of just 1 “reconciliation” bill), I am assuming that we are indeed going to see 2 more “reconciliation” bills this year. I am also assuming that we will NOT see any “reconciliation” bills in 2022. It’s an election year, so while not out of the realm of possibility, I would find it hard to believe that the Democrats would try to enact yet another “reconciliation” bill in an election year. Why? Answer: The 2010 mid-terms. Yes, the world is certainly different now than what it was in 2010, but pushing the ACA through “reconciliation” in March 2010 did NOT produce a good result for the Democrats in the 2010 mid-terms, and the current Democratic majority in Washington, DC does NOT want a redux of 2010. Soooooooo, assuming we are going to see 2 more “reconciliation” bills in 2021, I see 1 of 3 scenarios playing out:

Scenario #1: President Biden continues to say that he wants to work with Republicans on moving the Infrastructure Plan, but all the while President Biden and Congressional Democrats prepare to move the Infrastructure Plan through the “reconciliation” process. Axios even characterized President Biden’s actions this way: “It’s the unspoken Biden formula, talk like a rosy bipartisan; act like a ruthless partisan” (again, Axios’ words, not mine). THEN, once President Biden says to the American public that the Republicans will NOT go along with his Infrastructure Plan, Congressional Democrats – now that they know they are “going it alone” – will push for combining the American Families Plan with the Infrastructure Plan, and BOTH Plans will be processed as 1 single “reconciliation” bill. This preserves the 2^nd and last “reconciliation” bill of 2021 to be used for the big-ticket health care policy items noted above.

Scenario #2: The Infrastructure Plan gets enacted through the “reconciliation” process on its own as a free-standing “reconciliation” bill. Then, once Congressional Democrats turn to moving the American Families Plan through the 2^nd and last “reconciliation” bill of 2021, Congressional Democrats add the big-ticket health care policy items noted above and they run this combined package through the 2^nd and last “reconciliation” bill of 2021. In my opinion, we already seeing Democratic Leadership tee this up. As stated, a number of Democrats – led by Speaker Pelosi – are NOT shy in decrying that the American Families Plan does NOT include major health care changes. In my opinion, the volume on this will continue to be turned up, and President Biden will ultimately relent and say, okay, add health care, let’s see where this goes. And viola, the big-ticket health care policy items + the American Families Plan will be processed through “reconciliation” during the 4^th Quarter of this year.

Scenario #3: President Biden and Congressional Democratic Leadership affirmatively decide to hold-off on passing health care policy changes in 2021, and instead, opt to using “health care” as a campaign issue for the 2022 mid-terms. This would be a smart play because we have seen how deftly the Democrats have used “health care” as a campaign issue in the past, which has time-and-time-and-time-again produced positive results for them. On the campaign trail, Democrats will say: “Look, we made SIGNIGICANT changes by using the ‘reconciliation’ process this past Congress, but because this process is so limited, we could NOT do everything we wanted to do. Soooooooo, re-elect us in 2022 so we can finally get the job done in 2023. And oh by the way, if you help us increase our majority in the Senate and also help up keep the House, we can enact even more sweeping health care policy changes than we could have enacted had we tried to enact any health care changes in 2021.” Last comment: We are starting to see some more details on the big-ticket health care policy items noted above. In my next few updates, we will be digging into these details. Stay tuned…

Surprise Medical Billing Update

Answers to Nuanced Questions Will Have a Big Impact on the Forthcoming July 1^st Regulations

As I continue to work through surprise medical billing requirements, a number of nuanced questions keep coming up. And – at least in my opinion – the answers to these nuanced questions will ultimately dictate how the Federal Departments will tell us how we all must comply with the surprise medical billing requirements, at least all self-insured plans and insurance carriers operating in States with NO State surprise billing law on the books.
- Analysis: As I have told you in prior updates, in States that do NOT have a State surprise medical billing law in place, the median in-network rate for a particular medical item or service furnished in a particular geographic area is SUPER, SUPER important. More specifically, for insurance carriers and providers operating in States with NO State surprise billing law, the policyholder is required to pay an out-of-network provider all or a portion of the median in-network rate for the medical or item service they were furnished in the geographic area – AND – if the provider takes the insurance carrier to arbitration, the arbiter MUST take into account the median in-network rate for the medical item or service that was furnished in that geographic area when making a decision on a final payment amount. Same for self-insured plans. That is, in ANY State in which a self-insured plan is operating, the self-insured plan participant will pay all or a portion of the median in-network rate in the geographic area – AND – if a provider takes the self-insured plan to arbitration, the arbiter MUST take into account the median in-network rate in that geographic when making a final decision. As stated in my last update, this is because ERISA preempts any and all State surprise billing laws. So based on this, the BIG questions are: (1) How do you identify the “in-network rate”? – AND – (2) How do you identify the “median” of this “in-network rate”?

How Do You Identify the “In-Network Rate”?

The statute – while not particularly well written – specifically relies on the terms “the median of the contracted rates,” which is code for the median in-network rate that we all refer to. However, the statute does NOT tell us how to identify the “in-network rate” or what the “in-network rate” should actually be from a dollar amount perspective. If you were to ask a bunch of the payors and their service providers what the “in-network rate” should represent, you would get a lot of different answers. That’s because an “in-network rate” can be based on a bunch of different things ranging from a percentage of Medicare and a percentage of billed charges to a fixed dollar amount or a fee schedule.
- Analysis: Based on this grey area, I would expect that the Federal Departments are going to tell insurance carriers and self-insured plans how to identify the “in-network rate” in the forthcoming July 1^st regs. What might the Federal Departments tell us? Well, as you may recall, the Federal Departments were tasked with defining what an “in-network rate” is when developing the transparency regulations for self-insured and fully-insured plans (which, among other things, requires self-insured plans and insurance carriers to publicly disclose their in-network rates on a website). Why is this important? Well, because the Federal Departments already spent a TON of time and energy telling self-insured plans and insurance carriers how to come up with their in-network rates for purposes of disclosing these rates publicly. AND, if the Federal Department already have rules in place on how self-insured plans and insurance carriers must come up with their in-network rates, I believe the Federal Departments are likely going to rely on the work they have already done. Soooooo, while some may disagree with what the Federal Departments said in the final transparency regulations for health plans as it pertains to how these payors should identify and represent their “in-network rate” as, for example, a dollar amount, the Federal Departments have already memorialized their thinking in final regulations (which is now the law, unless changed through future rulemaking). Soooooooo – in conclusion – I believe that the manner in which insurance carriers in States with NO State surprise billing law and self-insured plans will identify the “in-network rate” will track the transparency regulations for health plans and how those regs tell these payors to identify and represent their “in-network rates” for public disclosure.

How Do You Identify the “Median”?

I think the more specific question to ask is: What is the baseline for finding the “median” of this “in-network rate”? Should the “median” be based on ALL of the payors (BOTH self-insured and insurance carriers) operating in a particular geographic area? Or, should the “median” simply be determined among the various plan designs offered by a SINGLE self-insured plan or the lines of business of a SINGLE insurance carrier. In other words, should the median in-network rate be determined “across” ALL self-insured AND fully-insured health plans offered in a geographic area? Or, should the median be determined “within” each INDIVIDUAL self-insured (or their administrator) and each INDIVIDUAL insurance carrier’s health plan offerings? Here’s the way I have thought about these questions:
- Analysis: Others may disagree when I say this, but based on everything I took away from the 2 plus years Congress debated the surprise medical billing issue, Congress NEVER envisioned multiple “medians” among multiple self-insured plans/administrators and insurance carriers operating in a geographic area. For example – at least in my opinion – Congress did NOT want Insurance Carrier #1, #2, #3, and #4 operating in a geographic area to have their own respective “median.” Same with self-insured plans. Congress was not envisioning that ASO-provider XYZ, ASO-provider ABC, TPA 123, and TPA 345, along with self-insured plan Delta that directly contracts with providers, to have their own unique “median.” If you had these multiple “medians,” you would have like 15 “medians” floating around in 1 particular geographic area. Again, people may disagree with me, but I believe that Congress always intended for there to be some sort of UNIFORM “median” in a particular geographic area. But here-in lies the rub: I believe it is MUCH easier for the payors and their service providers to identify the “median” WITHIN their own plan offerings/lines of business. And for this reason, there are going to be A LOT of payor-stakeholders that will encourage the Federal Departments to allow for multiple “medians” that is limited to a specific payor’s own plan offerings/lines of business. Make no mistake, I am NOT saying that this is necessarily wrong. Again, I agree that going with multiple “medians” is MUCH easier to administer if you are simply looking are your own “in-network rates.” BUT again, the problem here is that – at least based on my belief – Congress did NOT intend for multiple “medians.” Why is this important? Because the Federal Departments often times feel that they are bound to do what Congress intended when developing implementing regulations. Soooooo, if the Federal Departments – in the case of the surprise medical billing requirements – agree with me that Congress NEVER intended multiple “medians” floating around in a particular geographic area, then the Federal Departments are likely going to feel that they are bound to effectuate Congress’s intent here, and as a result, the Departments will likely reject stakeholders’ suggestions that they be allowed to identify their own unique “median” (again, even though multiple “medians” is the easiest way to implement this aspect of the surprise medical billing requirements). Sooooooo, assuming that – consistent with Congressional intent – the Federal Departments require the identification of a more uniform “median” among ALL payors in a geographic area, here’s a couple of follow-up questions: Should self-insured plans and insurance carriers be lumped together into 1 big group, such that the “median” is identified by looking at the “in-network rate” charged by each and every self-insured plan AND each and every insurance carrier operating in a geographic area? Should the Federal Departments bifurcate (and separate) the self-insured market and the insurance carrier market? After all, there are some differences between fully-insured plans and self-insured, especially self-insured plans that directly contract with providers and also unique arrangements like value-based plan designs and reference-based pricing (RBP) plans. Should the Federal Departments even go further and establish separate categories for different types of health plans like RBP and related plans that have no network? That’s getting into some complex territory that the Departments may want to avoid. BUT, this last question is a reasonable question to ask.

Transparency Update/Surprise Medical Billing Update

CMS and Transparency for MA Plans – A Sign of What May Be Coming?

CMS is proposing to get rid of a transparency requirement that would have required a provider to report the “median” payor-specific negotiated charge with Medicare Advantage insurance carriers on the provider’s Medicare cost report.
- Analysis: From my vantage point, this is the first action we have seen where the Biden Administration appears to be watering down a transparency requirement developed by the previous Administration. Is this a sign that more is to come? For example, will the Biden Administration try to water down the hospital transparency regulation? Also, the transparency regulation for self-insured and fully-insured health plans? What about the surprise medical billing requirements? My answer to each of these questions: I do NOT think there will be much more watering down. Why? First, as everyone struggles to wrap their head around the surprise medical billing requirements, we are finding that it is SUPER difficult to identify the “median” of the in-network rates for particular medical items and services (as discussed in detail above). Sooooo, in the case of providers reporting the “median” rate for MA plans, it seems that CMS agreed that finding the “median” is difficult, and as a result, CMS is now proposing to get rid of reporting the “median” rate. I also think that CMS went through the following thought process: CMS said, “Let’s make a ‘horse trade’ with the providers? For example, let’s throw the provider community a bone on the transparency stuff and we (CMS) will eliminate a particular requirement, but we (CMS) will also keep other requirements in place.” CMS then said to themselves, “What’s the lowest hanging fruit that we can eliminate? Weellll, an argument can be made that reporting the ‘median’ rate for MA plans was NOT the best idea (because identifying the “median” is so hard). Sooooooo, let’s eliminate this requirement for the provider community so they can go back to their members and tell them they got a ‘win.’ Then, the providers can continue to fight with us over the other transparency requirements, which we (CMS) will dig our heels in on, and both of us (the providers and CMS) walk away looking good.” “In this case, the providers are happy that they convinced us (CMS) to change an onerous transparency requirement, while consumer groups will still be happy with us (CMS) because we will still be standing up to the big bad providers and keeping other transparency requirements in place (and stepping up enforcement for non-compliance with these requirements).”

Let’s Weave In the Surprise Medical Billing Requirements Into the Conversation

In the case of surprise medical billing, the rub for CMS, the providers, and the payors is that the No Surprises Act’s statutory language specifically relies on the “median rate.” Sooooooo, CMS is stuck and bound by the statute to identify the “median rate” and nothing else. Sure, CMS can explain all day long that the “median” is NOT the correct benchmark, and all of the stakeholders can complain that finding the “median” is SUPER difficult. But again, unless Congress changes the statute, the “median rate” is what CMS has to tell everyone to identify for surprise billing purposes.
- Analysis: Related to this, unlike the surprise billing requirements, this Inpatient Payment Reg is NOT necessarily driven by statute. Rather, CMS is coming up with its own rules – which CMS has the authority to do – for the public health programs, including MA. And initially, CMS thought the “median” was the right way to go. BUT, for the same reasons people are struggling with “how do you find the ‘median’ for surprise billing purposes,” I would argue that the providers said to CMS that the “median” is NOT the correct benchmark for MA transparency, and it’s WAY too hard to identify, and oh by the way, we hate transparency altogether, so you have to get rid of this requirement to “report the median payer-specific negotiated charge with MA insurers.” CMS then said to themselves, “You know what, the providers are right, and because we (CMS) are NOT bound by the statute to require the reporting of the ‘median’ here, we (CMS) should feel comfortable getting rid of this.” BUT again, CMS cannot do this with the surprise billing language, again, on account of the statute. Last question: Will CMS water down the hospital transparency reg and/or the health plan transparency reg? Again, I don’t think so. Unlike the Inpatient Payment Reg and the surprise medical billing requirements, the hospital transparency reg does NOT require the identification of the “median.” The closest thing to the “median” in the hospital reg is disclosing the minimum negotiated rate and the maximum negotiated rate. I am NOT a math-guy, but I suppose you can reverse-engineer the “median” from this minimum-and-maximum. So, maybe CMS proposes to eliminate this min-max negotiated rate disclosure requirement for the hospital transparency reg. I would argue the min-max disclosure requirement is duplicative anyway (because the hospital transparency reg already requires the disclosure of payor-specific negotiated charges, so do you really need to disclose the minimum-and-maximum negotiated rates?). Similarly, when it comes to the transparency regs for self-insured and fully-insured plans, these rules do NOT contemplate a “median” either. Rather, these health plans are required to disclose their “in-network rates” they charge for the medical items and services covered under the plan. Last comment: I will keep an eye for any more changes on the transparency-front. Especially now that the surprise medical billing requirements are part of the equation (and especially because I believe the Federal Departments will rely on the health plan transparency regulations when it comes to telling self-insured and insurance carriers how to identify the “in-network rate” and the “median” of that rate).

Federally-Developed and Maintained Database of In-Network Rates

When the Federal Departments were developing the transparency regs for self-insured and fully-insured plans, public commenters asked HHS to build and maintain a Federally-run database that housed ALL of the in-network rates that are publicly disclosed by each and every self-insured plan’s and insurance carrier’s web site. In other words, HHS was asked to go out an aggregate ALL of the publicly disclosed in-network rates by ALL of the payors subject to the health plan transparency regs.
- Analysis: The Federal Departments rejected this suggestion, opting instead to rely on private-sector companies to aggregate the publicly disclosed in-network rates into a single database that could, for example, be customized for each payor. These private-sector companies could also make the publicly disclosed in-network rates through a mobile app or even an Application Program Interface (API). Speaking of an API, the Federal Departments issued a Request For Information (RFI) when initially proposing the health plan transparency regs, requesting public comments on whether HHS should develop a publicly accessible API that – like these private-sector APIs – would deliver the publicly disclosed in-network rates directly to the end-user who could be, for example, a plan participant or a physician treating a plan participant. Unfortunately, because the idea of a Federally-developed API was suggested in an RFI – and NOT a proposed regulation – we will NOT be seeing a Federally-developed API with the publicly disclosed in-network rates any time soon. Having said all of that, I would submit that the Federal Departments should re-visit and re-consider the idea of developing a Federally-maintained database of the publicly disclosed in-network rates. In addition, I believe the Federal Departments should move forward and issue proposed regulations on the development of a publicly accessible Federal API through which plan participants, payors, providers, policymakers, researchers, etc. can access the publicly disclosed in-network rates. At least to me, this is what increasing transparency is all about, right?!?.

Again, Let’s Weave In the Surprise Medical Billing Requirements

The No Surprises Act did NOT give the Federal Departments any clear guidance on how to appropriately and accurately aggregate data relating to the in-network rates charged by both self-insured and fully-insured plans in a particular geographic area to identify the “median.”
- Analysis: All the statute said was in cases where a self-insured plan or insurance carrier does NOT have enough information to accurately identify the median in-network rate in a geographic area, these payors can look to a database that is “approved” by the Federal Departments. However, as a condition of “approval,” the database cannot have a conflict of interest and the database must also show that its “data set” has sufficient information to accurately reflect the rates that are charged for medical items and services in that geographic area. Concerns have been raised that entities attempting to receive “approval” to serve as a reliable database may rely on certain factors like billed charges and/or Usual and Customary Rates for their “data sets.” There is also concern that while the statute indicates that the database cannot have a conflict of interest, a conflict of interest may still be present and not properly disclosed during the “approval” process (because, for example, the database may be funded by a provider or a private equity firm that is also invested in provider(s)). BUT, if there is a Federally-developed and maintained database that aggregates ALL of the publicly disclosed in-network rates charged by ALL payors in ALL geographic areas, this will eliminate the concern of potential conflicts of interest, and this will effectively ensure that the “data set” is simply the publicly disclosed in-network rates. Maybe I am thinking too simplistically here, but it just seems like a good idea, and one which can serve multiple purposes.