Health Care Policy Update

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

The COVID Public Health Emergency (PHE) Will Be Extended Yet Again

Ever since the PHE was extended for the 9^th time – to July 15^th – there was growing speculation that the Biden Administration would NOT extend the PHE past the July 15^th date, and instead, the White House would triumphantly announce that President Biden has defeated COVID. Such an announcement would be liberating, as the American public looks to enjoy what many hope is a COVID-free Summer.
- Analysis: However, as we all got closer to the “decision time” (which was May 16^th (i.e., 60 days before July 15^th because the Administration told the States that they would be notified 60 days in advance of any decision to END the PHE)), it was looking more-and-more like the PHE would be EXTENDED for a 10^th time. Why did it appear that the PHE would be EXTENDED for a 10^th time? The Biden Administration is/was in a rock-and-a-hard-place. On the one hand, the White House wants to shout-from-the-roof-tops that the COVID pandemic is OVER, assuring the American public that we are on the road back to normalcy. Promises of getting past the COVID pandemic was a 2020 “campaign pledge,” and having COVID in the rear-view-mirror would be super helpful to Democrats in the upcoming mid-terms in November. But on the other hand, (1) if the Administration ENDED the PHE on July 15^th and (2) the country subsequently experienced another COVID spike in say in September and October (right before the mid-term elections), that would be SUPER BAD for the President and Congressional and State Democratic Candidates seeking to be elected or re-elected in November. Another really BIG problem associated with ENDING the PHE is the loss of health coverage for millions of people. And I am not talking about single digits, I am talking about double-digit millions.

Ending the PHE and the Loss of Health Coverage

As you have heard me – and others – report, there are a number of health care-related measures tied to the PHE. They range from free COVID tests and extensions of COBRA and HIPAA deadlines to the expanded use of tele-health and certain waivers under various public health programs.
- Analysis: BUT, the MOST important health care-related measure tied to the PHE is Medicaid coverage. Here, until the PHE ends, States can access increased Federal money if the States did NOT – and do NOT – question a person’s eligibility for Medicaid. BUT – as you have ALSO heard me and others say – once the PHE ends, States are required to re-start their “eligibility determinations,” and on account of “re-determinations” for those individuals currently enrolled in Medicaid, a great number of these individuals (reports indicate up to 16 million) will NO LONGER be eligible for Medicaid, and thus, they will either have to (1) find health coverage elsewhere or (2) go without insurance. Importantly, the Biden Administration has given States 12 additional months after the END of the PHE to “re-determine” people’s Medicaid eligibility. So, even if the PHE ended on July 15^th, most of the now-Medicaid eligible individuals will continue to have coverage for at least a period of time post-July 15^th (in some cases, all the way into June 2023). That provides a MUCH NEEDED cushion and ensures that there will NOT be a loss of coverage – en masse – all at once. HOWEVER, if the END of the PHE was announced May 16^th, you can bet-your-bottom-dollar that the media would post headlines like “With the End of the PHE, Millions of People Will Now Lose Their Health Coverage.” That type of headline will only confuse people, and it will make everyone think that people will lose coverage immediately, even though the reality is that the Biden Administration has allowed for a lengthy off-ramp. You can also bet-your-bottom-dollar that the notion that “Millions of People Will Lose Their Health Coverage” would be used in the mid-term election campaigns. I am NO fan of intellectually dishonest political “messaging” (BOTH parties do it), but I do know that such political “messaging” is effective (remember how effective the “NOT Protecting Pre-Existing Conditions” claims were). So you can see, not only did the White House want to avoid having egg-on-their-face if there was a COVID spike this Fall, the White House certainly did NOT want people to think that they are going to immediately lose their health coverage on account of the END of the PHE, especially so close to the mid-term elections. Last comment: I could very well see the PHE being extended yet again and again, until at least Jan. 2023. That gets the White House past the mid-term elections, and it gets them through the Winter when COVID could rear-its-ugly-head. Heck, some analysts are suggesting the PHE will be extended all the way through April or even July 2023. Only time will tell…

The “Enhanced Premium Subsidies” and COVID

The COVID pandemic also helped justify a sizable increase in the ACA’s premium subsidies, along with a justification for helping out consumers in the “unsubsidized” individual market by making them eligible for a premium subsidy for the first time. AND, the timing was “just right for” including this change in the last COVID Stimulus Package – or the “American Rescue Plan” – enacted back in March 2020.
- Analysis: You are probably sick of me talking about the “enhanced premium subsidies.” In virtually every update since April 2020, I have talked about them, either analyzing their “coverage” effects and cost to the Federal government – OR – speculating whether an extension would actually happen (through my lengthy discussions about the “drama” over the Build Back Better Act). As I noted in my last few updates, there are very FEW legislative vehicles on which an extension of the “enhanced premium subsidies” can ride. In my last update, I also noted that there are only a FEW legislative days left between now and the mid-term elections in November. Connecting these 2 dots alone, I think that – unless something miraculous happens – there is a 1% chance that the “enhanced premium subsidies” will be extended by Nov. 1^st (which is the start of the 2023 “open enrollment” period). As I have also mentioned, maybe something happens AFTER the mid-term elections in a “lame-duck” session (i.e., maybe Congressional Democrats can move legislation that includes an extension of the “enhanced premium subsidies” by Dec. 31^st). BUT, the likelihood of that is maybe 2%, at least at this point in time (as inflation continues to rage on and talks of a recession continues to rattle the markets). I will keep watching this, but if you haven’t already given up on seeing an actual extension of the “enhanced premium subsidies,” I would start planning for a world WITHOUT them.

Transparency Update

The RAND Corporation’s Studies and Increased Transparency of Medical Prices

The RAND Corporation just released a report indicating that employer-sponsored plans pay hospitals – on average – 224% of what Medicare pays for the same medical item or service.
- Why is this noteworthy? Well first, RAND has released this same type of study over the past couple of years. And, based on RAND’s findings (that employers are paying hospitals significantly higher rates than what Medicare pays), some employers have re-negotiated their contracts with medical providers, effectively demanding – and ultimately achieving – lower rates. By way of example, in prior reports, RAND found that medical providers in Indiana were charging the highest rates relative to Medicare than any other State in the country. Equipped with this information, a number of employers in Indiana successfully pressured these Indiana-based providers to lower their rates.

Why is this point noteworthy? At least in my opinion, this Indiana example – coupled with the increased attention RAND is getting on this year’s study – tells us that when employers have an increased level of transparency in the medical prices they are paying, employers are going to respond by demanding lower payment rates.

Why is this point noteworthy? In less than a month-and-a-half (i.e., July 1^st), every insurance carrier and self-insured plan MUST disclose their in-network rates and out-of-network allowed amounts on a public website through a “machine-readable file.” This means that anyone – employers, their TPAs, benefit consultants, researchers (like RAND), entrepreneurs, and also insurance carriers – will be able to access pricing data that will show how much both fully-insured and self-insured employers are paying specific medical providers (yes, the name of specific medical providers MUST ALSO show up on these public Files in the form of the provider’s National Provider Identifier, Place of Service Code, or Taxpayer Identification Number).

Why is this point noteworthy? While this increased access to pricing data is not going to change the world over-night, the fact the employers, TPAs, and benefit consultants are going to be able see what other employers and insurance carriers are paying for the same medical items and services, employers, TPAs, and their benefit consultants will be equipped with information they NEVER had access to before, and information that will likely empower them to negotiate lower rates (again, just look at the behavioral change the RAND studies empowered). This will likely start with smart, motivated, and savvy jumbo employers who have the resources and willingness to (1) spend money to compile all of the data, (2) pay a data analytics firm to “crunch the data,” and (2) pay a TPA or benefit consultant to help them sort through all of the trends and contracting opportunities. These jumbo employers will be the first out-of-the-gate PUSHING for lower rates. Then, some smart, motivated, and savvy TPAs and benefit consultants out there will do the same, and they will offer up this same strategic information to large- and mid-sized employers (for a fee of course). BUT, because these large- and mid-sized employers do NOT have the same resources to throw at this like the jumbo employers do, large- and mid-sized employers will be happy to pay a fee to their TPA and/or benefit consultant if it means that these large- and mid-sized employers can save money by negotiating lower rates.

Why is this point noteworthy? INFORMATION IS POWER. AND, the RAND studies have shown us that when equipped with information that is as simple as – “how much is my health plan paying relative to Medicare” – employers are responding by demanding lower rates from medical providers. Just think how many MORE employers, TPAs, benefit consultants – and even insurance carriers – are going to be empowered to demand lower rates on account of the transparency of the medical prices that virtually EVERY payer is currently paying to medical providers? I would argue A LOT. And I would similarly argue that these employers, TPAs, benefit consultants – and even insurance carriers – are going to act on this new information by demanding lower rates and either (1) re-negotiating their existing contracts or (2) walking down the street to those medical providers and/or owners of provider networks that are going to offer reasonable rates. For many, July 1^st can’t come soon enough…

ACA Exchange Update

The 2023 Notice of Benefit and Payment Parameters Attempts to Make “Narrow Network” Plans Not so “Narrow”

It is well-established that the loin’s share of individual market plans sold through an ACA Exchange have a “narrow network.” Don’t take my word for it, Avalere Health – and others – have released reports showing that over 70% of the plans sold through the ACA Exchanges have a “narrow network.”
- Analysis: It is also well-established that a primary reason insurance carriers develop “narrow network” plans is to keep the cost of the plans low. The strategy here: The fewer the providers in the network – coupled with a relatively lower than average contracted rate with these providers (or the ability to leverage providers that serve the Medicaid population) – the lower the overall cost of the Exchange plan is going be. AND, we have also found that most of the consumers that purchase an ACA Exchange plan are shopping based on “price.” The drafters of the Affordable Care Act recognized that a number of the insurance carriers selling Exchange plans would develop “narrow network” plans, so the statute includes language (i.e., “network adequacy” standards) ensuring that there is a sufficient choice of medical providers within the plan. BUT, the ACA’s drafters NEVER expected the influx of “narrow network” plans in the years after the ACA Exchanges came on-line. So, it has been up to the Federal regulators at CMS to manage how “narrow” these “narrow network” plans could and should be. And this is where the Notice of Benefit and Payment Parameters (NBPP) comes in. As you know, the NBPP is issued annually, updating and modifying the rules applicable to the individual market and ACA Exchange plans for the upcoming year(s). When it comes to the ACA’s “network adequacy” standards, the Trump Administration eased some of the standards through prior NBPPs. BUT, now that the Biden Administration is able to set the policy, the Biden Administration wants to get back to enforcing the “network adequacy” standards, and to even go further than where the Obama Administration was on these standards. Soooooo, one of the more noteworthy changes in the recently released final 2023 NBPP is what I will call a “beefing up” of the “network adequacy” standards. The main focus: The “time” and “distance” it takes to drive to a medical provider. Also, how long it takes for an Exchange planholder to get an appointment. Note, this “appointment wait time” standard is NOT applicable until the 2024 plan year. So, I will only focus on the “time” and “distance” standards (see below).

The “Time” and “Distance” Standards and Accommodations for NOT Being Able to Meet These Standards

HHS sets forth a list of providers that are subject to the “time” and “distance” standards. This list generally tracks the Medicare Advantage rules, although there are some additional providers that made the list for Exchange plans.

Analysis: HHS also indicated that reviewing whether these “time” and “distance” standards are indeed met must be based on hard-“quantitative data” (instead of attestations or “qualitative data”) at the county level, and that county “designations” will be based on population size and density of a respective county, similar to how counties are “designated” under Medicare Advantage (e.g., large metro county, metro county, micro county, rural county, and counties with extreme access considerations). In the interest of simplifying the details here, let me give you a snap-shot example of how the “time” and “distance” standards will be applied to a specific “type” of provider set forth on HHS’s “list of providers” in a “designated” county:

- - For a chiropractor, at least 90% of Exchange planholders must have access to at least 1 chiropractor within 30 minutes and 15 miles in a large metro county; 45 minutes and 30 miles in a metro county; 80 minutes and 60 miles in a micro county; and 90 minutes and 75 miles in a rural county.

- - Compare that with gynecology/OB/GYN, where at least 90% of Exchange planholders must have access to at least 1 provider within 10 minutes and 5 miles in a large metro county; 15 minutes and 10 miles in a metro county; 30 minutes and 20 miles in a micro county; and 40 minutes and 30 miles in a rural county.

Arguments have been made – and will continue to be made – that requiring insurance carriers to “beef up” their provider networks (by, for example, contracting with more providers) will increase the cost of the plan. However, HHS explains that the benefits to consumers resulting from strengthened network adequacy standards outweighs the increased burdens on insurance carriers and the increased costs to the consumer. I will let you decide which side you want to take on these points. BUT, HHS does recognize the burdens – and the increased costs – associated with meeting these more stringent “network adequacy” standards, and in response, HHS is allowing insurance carriers to submit “justifications” as to why the carrier CANNOT meet these standards. AND, if HHS is satisfied with the carrier’s “justifications,” HHS will give the carrier “a pass” on meeting these standards, at least for the plan year in question. We do NOT have all of the details on what “justifications” HHS needs to give carriers “a pass,” but HHS did say that information about the availability of providers and the variables reflected in local patterns of care will be taken into account. So will information on provider shortages in a particular area. HHS has instructed carriers to submit any of the above stated information – along with the following information – on the Network Adequacy Justification Form: The reasons that one or more time and distance standards were not met; The mitigating measures the carrier is taking to ensure planholders have access to respective provider specialty types; Information regarding planholder complaints regarding network adequacy; and The carrier’s efforts to recruit additional providers.