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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 Biden Administration Wants to Put a “Check” on Consolidation, As Well As Other Anti-Competitive Behavior

  • On July 9th, President Biden issued an Executive Order (EO) titled, Promoting Competition in the American Economy. The main purpose of the EO is to make everyone aware (everyone meaning the general public, but also business leaders) that the Biden Administration wants to crack down on growing consolidation in specific industries (think of the cable, cell phone, airline, tech, and health care industries).
    • Analysis: Most argue that such consolidation increases prices for consumers due to the lack of competition, and many others argue that such consolidation allows certain companies to take advantage of a consumer’s inability to negotiate reasonable prices and other conditions for consuming/purchasing a particular product. As I have explained to you in the past, an Executive Order (EO) does NOT have the force of law. EOs merely direct the Federal Departments to enforce a particular aspect of the law or to develop regulations effectuating a particular policy priority. This July 9th EO is no different. For example, this EO directs the various Federal Departments with jurisdiction over the specific industries noted above to enforce certain aspects of the law – such as anti-trust law – to combat anti-competitive behavior. The EO also directs the Federal Departments to develop and implement specific policies like, among other issues highlighted in the EO, prohibiting the use of “noncompete agreements,” which companies use to prevent workers from leaving their job and either starting their own company or working for their former employer’s competitor. From a health care policy perspective, this EO had A LOT to say about “health care.”  For example, the EO directs the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to stop future mergers among hospitals and insurance carriers, and also, to review past mergers and break them up if the FTC and/or the DOJ find that prior approval of the merger was unwarranted and/or in violation of the law. The EO also directs HHS and the FDA to adopt policies that would allow States and Tribal governments to import prescription drugs from Canada, and also, to adopt policies that would support the use and sale of generic prescription drugs and biosimilars. The EO even “directs HHS to issue a comprehensive plan within 45 days to combat high prescription drug prices and price gouging,” which is a signal that we are going to see rulemaking on how the Biden Administration is going to try to lower prescription drug costs through regulations (a complementary effort to what Congress is trying to do through the drug pricing reforms we are likely going to see in the forthcoming “reconciliation” bill). Again, these are all examples of where the Federal Departments have to “do something” for this EO to have teeth. If the Federal Departments do nothing, this EO is merely a “messaging” campaign.


Transparency Update

President Biden Wants Hospitals to Comply With the “Hospital” Transparency Regulations

  • Speaking of the Federal Departments having to “do something,” if you thought the Biden Administration was going to rescind or significantly water down the “hospital” transparency regulations issued by the Trump Administration…THINK AGAIN. Why? Because President Biden just signaled that the White House wants HHS to enforce and implement the hospital transparency requirements that became effective Jan. 1st of this year.
    • Analysis: The July 9th EO specifically directs HHS to “support existing hospital price transparency rules,” which to me is “code” for the White House telling HHS that the Department better start enforcing and faithfully implementing the hospital transparency requirements, despite these regs being Trump-era rules. As I am sure you have read in the news, some hospitals are complying with the new transparency regs, while many other hospitals are NOT (because they are either willfully choosing not to comply or they do not have the resources to comply). There are even some hospitals actively undertaking efforts to make it super difficult for consumers to access the type of information that the regs require the hospitals to disclose. Much of this resistance to complying is due to the fact that the penalty for non-compliance is pretty minimal from a dollar perspective ($300 per day during the period of non-compliance, which is chump change for most hospitals generating millions/billions in revenue each year). Also, the regs were developed in such a way where it takes a long time for a non-compliant hospital to actually get penalized.  For example, for those hospitals who are found to be non-compliant, HHS is required to send a letter telling the hospital (1) that they are non-compliant and (2) that they must take steps to start complying. If the hospital remains non-compliant, only then will penalties attach. In the Spring, reports indicated that HHS started sending these letters out to non-compliant hospitals. BUT, we have not heard much more…UNITL NOW.  NOW, it appears that HHS is going to ramp up their enforcement efforts to ensure compliance (per President Biden’s direction). Last comment (and it relates to my opening comments above): Within minutes after the election of President Biden back in November 2020, a lot of health policy analysts – including me – asked whether the Biden Administration is going to rescind or significantly water down the hospital transparency regs due to the fact that these regs are Trump-era rules. None of us were fully sure at the time, but some analysts – including me – believed that “the transparency toothpaste is out of the tube,” and we believed that the Biden Administration WOULD indeed implement and enforce the hospital transparency regs. If this EO is more than just a “messaging” campaign, it looks like we were right.


The Surprise Billing Rules Will Also Keep the “Health Plan” Transparency Regulations Intact

  • The EO does NOT specifically call out the transparency regulations that apply to fully-insured individual and group health plans, as well as self-insured plans (i.e., the “health plan” transparency regulations). HOWEVER, the EO does specifically direct HHS to implement the new surprise medical billing requirements. Why is this important?
    • Analysis: There are a number of aspects of the July 1st surprise billing IFR that rely on the approaches and definitions that the Federal Departments already adopted in the health plan transparency regulations. In particular, the July 1st surprise billing IFR spends a lot of time explaining how an insurance carrier and a self-insured plan is supposed to determine the in-network median rate for a particular medical item or service furnished in a particular geographic area.  The IFR emphasizes that one of the most important components of determining this in-network median rate is identifying the “contracted rate” that an insurance carrier/self-insured plan negotiates with a medical provider. In the preamble of the July 1st surprise billing IFR, the Federal Departments specifically say that the definition of a “contracted rate” for purposes of the surprise billing rules is substantially similar to the definition of a “negotiated rate” under…wait for it…the health plan transparency regulations. In another example, the Federal Departments state that the approach taken when determining the value of the “contracted rate” in cases where the carrier/plan uses an “underlying fee schedule” is the same approach the Departments developed for publicly disclosing in-network rates under…wait for it…the health plan transparency regulations. The Federal Departments further provide that the term “underlying fee schedule” has substantially the same meaning as how that term is defined in the…yes, you guessed it…the health plan transparency regs. In yet another example, the Federal Departments go on to explain that in cases where there is no underlying fee schedule, a carrier or plan may calculate the value of the “contracted rate” using a “derived amount,” which the Departments say “is consistent” with how the health plan transparency regulations tell carriers and plans to calculate the value. My apologies for the hyper-technical examples here, but I wanted to illustrate how inter-woven the health plan transparency regs are with the surprise medical billing rules. AND, I needed to torture you to connect the following dots: (1) Because the surprise medical billing rules will continue to be faithfully implemented (per President Biden’s direction in the July 9th EO), (2) I believe that the health plan transparency regs are NOT going to be rescinded or significantly watered down because of the inter-connection between these related rules. Let me also say this: While the Federal Departments did NOT come out and say this in the surprise billing IFR, the fact that every insurance carrier and self-insured plan is going to have to publicly disclose their in-network “contracted rate” for a particular medical item or service starting Jan. 1, 2022 (only 6 short months from now), the Federal Departments know that this disclosure requirement is going to make it easier for carriers and self-insured plans to determine their in-network median rate for purposes of satisfying the surprise billing requirements. This will also help private-sector companies that want to build databases or specific tools to help carriers/plans comply with the surprise billing requirements.  These tools can also be used by providers to make sure that the carriers and plans are correctly – and fairly – determining their in-network median rate, and such tools can also be used by arbiters during the arbitration/IDR process. Sooooooooooo, that is why I believe the health plan transparency regulations will remain intact, despite these regs also being Trump-era rules.


Surprise Medical Billing Update

The 1st Set of the Surprise Medical Billing Regulations Is Out

  • On July 1st, the Federal Departments met their statutory deadline of issuing the 1st set of regulations implementing the surprise medical billing requirements by releasing an Interim Final Rule (IFR), titled “Requirements Related to Surprise Billing; Part I.”
    • Analysis: Consistent with what I explained to you in prior updates, this IFR further defines certain statutory terms (like “emergency services,” “post-stabilization services,” and “nonparticipating providers/health care facilities”). As also expected, the IFR explains how the surprise billing payment process will work. To put a finer point on this last point, the primary focus of the IFR was detailing how the surprise billing payment process works by telling us: (1) How to determine how much the patient will pay and when – AND – (2) How to determine how much the plan will pay and when. The IFR also speaks to other important issues including:
      • ERISA preemption;
      • When a State surprise billing law applies and when the Federal surprise billing requirements apply;
      • Information that insurance carriers and self-insured plans must share with providers on how the carrier/plan determined the in-network median rate for a particular medical item or service; and
      • Notice and consent rules that providers must satisfy.


As stated above, I will dig further into the rules governing how the surprise medical billing payment process works in my next update. I will also highlight ERISA preemption and address the State law versus Federal law question. BUT FOR NOW…I wanted to hit on what is NOT in the July 1st IFR. In my opinion, what’s NOT in the July 1st IFR is almost just as important as what’s in the Rule.

What’s NOT In This July 1st IFR, and When Should We Expect Guidance/Regulations Implementing These OTHER Provisions? 

  • In the preamble of the July 1st IFR, the Federal Departments signaled what OTHER provisions of the No Surprise Act (e.g., other surprise billing requirements, but also, transparency-related provisions) are NOT in the IFR but WILL be implemented in forthcoming guidance/regulations. The Federal Departments even bucketed out WHEN we should see guidance/regulations on these OTHER provisions – both BEFORE Jan. 1, 2022, and also, AFTER Jan. 1, 2022.
    • Analysis: The Federal Departments admit that while the requirements in the No Surprise Act are generally effective Jan. 1, 2022, the Departments will NOT be able to issue implementing guidance/regulations for the following provisions until some time AFTER Jan. 1, 2022:
      • Listing in-network and out-of-network deductibles and out-of-pocket limits on a patient’s insurance card and other plan documents;
      • Providing updated provider network directories to participants;
      • The prohibition on contractual “gag clauses” (which involves data-sharing between an insurance carrier and a medical provider or owner of provider network provider); and
      • Pharmacy benefit and drug cost reporting.

In these cases, the Departments explain that any future regulatory requirements will include a prospective applicability date so insurance carriers, self-insured plans, and medical providers have a reasonable amount of time to comply with new or clarified requirements. The Departments also indicate that until rulemaking to fully implement these provisions is finalized and effective, carriers, plans, and providers are expected to implement the requirements using a good faith, reasonable interpretation of the statute. Importantly, the Departments say that they will be issuing guidance “in the near future regarding [their] expectations related to good faith compliance with these provisions.” Below are my thoughts on this “good faith” compliance standard:

The fact that a particular provision does NOT have implementing guidance/regulations when the provision’s statutory effective date comes due does NOT mean that you can IGNORE complying with the new requirement. Instead, you MUST do your best to comply with the provision all the way up until the time you receive implementing guidance/regulations with the prospective applicability date. This is what “good faith compliance” means!! Choosing NOT to comply because you do NOT have implementing guidance/regulations is akin to willful disregard of the new requirement, which (1) is NOT “good faith” compliance and (2) carries with it penalties that will indeed attach.

What Guidance/Regulations Should We Expect Later This Year?

  • The preamble of the July 1st IFR also indicates that the Federal Departments intend to issue guidance/regulations on the following some time between now and Dec. 31, 2021:
    • Regulations detailing how the Federally-developed arbitration/IDR will work;
    • Patient protections through transparency and the patient-provider dispute resolution process;
    • The price comparison tool (which is similar to the cost-sharing liability tool in the health plan transparency regulations that is not effective until Jan. 1, 2023 and Jan. 1 2024).

My Comments on the Federally-Developed Arbitration/IDR Process

  • Note, many of us are expecting another Interim Final Rule on the Federally-developed arbitration/IDR in September.
    • Analysis: But also note, maybe the Federally-developed arbitration/IDR rules will end up being issued as a proposed regulation. It is important to note that the statutory effective date for issuing regulations on the Federally-developed arbitration/IDR is Dec. 27, 2021. HOWEVER, as noted above, the overall effective date of the surprise billing requirements – which include the Federally-developed arbitration/IDR process – is effective Jan. 1, 2022. BUT, while an IFR is NEVER ideal for stakeholders, seeing an IFR in September would be helpful so carriers, plans, and providers know what the rules-of-the-road are sooner than a mere 4 days before the rules become effective.

My Comments on the Price Comparison Tool Requirement

  • The price comparison tool requirement is interesting to me. First, it is a statutory provision in the No Surprises Act, yet it is similar to the cost-sharing liability tool, which is a regulatory requirement that is a part of the health plan transparency regs.  As I noted above, I believe that the health plan transparency regs will remain intact. If so, then this means that the cost-sharing liability tool requirement will ALSO remain intact. And if so, it begs the following question: How will the Federal Departments reconcile these 2 provisions, especially their effective dates?
    • Analysis: To this latter point, the effective date for the price comparison tool statutory provision is Jan. 1, 2022. BUT, in the final health plan transparency regs, the Federal Departments pushed out the cost-sharing liability tool effective date to Jan. 1, 2023 and Jan. 1, 2024. What to do? Here are my thoughts: I think the Federal Departments will say that the statutory price comparison tool is substantially similar to the cost-sharing liability tool in the health plan transparency regs, and therefore, if a carrier or self-insured plan complies with the cost-sharing liability tool requirement, the carrier/plan will automatically comply with the statutory price comparison tool requirement. BUT, it’s NOT a 2-way street. If a carrier/plan ONLY complies with the statutory price comparison tool requirement, then the carrier/plan will fail to comply with the cost-sharing liability tool requirement in the health plan transparency regs. I also think that the Federal Departments will call the 2022 plan year a “non-enforcement year” with respect to the statutory price comparison tool requirement. More specifically, I believe the Federal Departments will say that if carriers and plans are undertaking efforts to comply with the cost-sharing liability tool requirement in the health plan transparency regs during the course of 2022, the carrier/plan will deemed to be in compliance with the statutory price comparison tool requirement, and the carrier/plan will NOT get dinged for not yet making available a price comparison tool available to policy-holders/participants, so long as the cost-sharing liability tool is made available to policy-holders/participants on Jan. 1, 2023 and Jan. 1, 2024. Maybe I am off-base here, but this is where my head right now.

Anything About the AEOB Requirement?

  • NO, there is ZERO – ZILCH – on the AEOB requirement in the July 1st IFR. AND, the Departments do NOT even mention the AEOB requirement when telling stakeholders what guidance/regulations they should expect for the rest of 2021 and into 2022. This is causing some angst among insurance carriers and self-insured plans.
    • Analysis: The biggest concern that carriers/plans have about the AEOB requirement is that they are required to rely on the medical providers to provide the carrier/plan with information about the estimated cost of the medical item or service that will be furnished. More specifically, the carriers/plans are concerned that the providers will NOT give them timely information and/or the providers will give them incorrect information. In either case, the carrier/plan will NOT be able to comply with the AEOB requirement, and the carriers/plans do NOT want to get dinged for non-compliance if they do NOT have the proper information to comply in the first place. I am NOT necessarily sure how this issue gets resolved through guidance/regulations other than to give the carriers/plans a “safe harbor” that says: “If you made every effort to send the required AEOB to participants, but you omitted some information because you did NOT get timely information from the providers, NO penalties will attach for NOT including ALL of the required information.” We’ll have to wait and see if I am right here…