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Legislative Update

Legislative Update

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

2-Track “Play” – The “Hard Infrastructure” Bi-Partisan Deal and The “Soft Infrastructure” Democrat-Only “Reconciliation” Bill (cont.)

  • As I told you in my last update (see below if you want to review), the Biden Administration and Congressional Democrats are trying to enact their policy priorities in a 1-2-punch-type fashion, adopting a 2-track “play” where first, they – ALONG with Congressional Republicans – enact a “Hard Infrastructure” Package (funding for roads; bridges; public transportation; broad-band; etc.), and then they – WITHOUT Congressional Republicans – enact a “Soft Infrastructure” Package (funding for programs like a National Paid Leave program; 2 years of free college and pre-school; making permanent (or at least extending) the enhanced ACA premium subsidies; adding hearing, vision, and dental coverage to Medicare; and climate change and immigration reforms).
    • Analysis: On Tuesday, the Senate successfully passed the “Hard Infrastructure” Package on a bi-partisan basis (69 to 30).  Both political parties are pretty much taking their own victory lap (which in my opinion, each political party deserve because both parties FINALLY worked together, compromised, and agreed on policy changes that will benefit our economy and pretty much every American). Sorry for the digression there, but it’s refreshing to FINALLY see some bi-partisanship, which is something we have unfortunately NOT seen for more years than I would like to count. BUT, any celebration is premature. Why? Because Speaker Pelosi has told President Biden (the President also enthusiastically supported that bi-partisan Package) that a vote on the “Hard Infrastructure” Package will NOT be scheduled in the House until AFTER the Senate passes the “Soft Infrastructure” Package. This political brinkspersonship means that the “Hard Infrastructure” Package ain’t gonna be signed into law any time soon.  UNLESS – when the House of Representatives reconvenes on Aug. 23rd – Speaker Pelosi can be convinced by President Biden and Senate Democrats that the House MUST approve the “Hard Infrastructure” Package immediately. I unfortunately do NOT see that happening.  Which means, the “Hard Infrastructure” Package will languish until the drama over “what’s-in” and “what’s-out” of the “Soft Infrastructure” Package runs-its-course.


The “Soft Infrastructure” Package and the Recently Approved “Budget Resolution”

  • Okay, so the Senate’s passing of the “Hard Infrastructure” Package on a bi-partisan basis was – as Ron Burgundy would say – “kind of a big deal.” BUT, the BIGGER deal – at least in my opinion – is going to be passing the “Soft Infrastructure” Package. Why? Because of the sweeping social policy changes that we now know will be included in the forthcoming “reconciliation” bill, which is slated to spend $3.5 trillion. How do we know what will be included in the forthcoming “reconciliation” bill? The recently approved “Budget Resolution” just told us…well, sort of…
    • Analysis: Up until now, we only had anecdotal information on what the Biden Administration and Congressional Democrats wanted to include in the “Soft Infrastructure” Package. In other words, we didn’t have a lot of details to say for certain “what’s in” and “what’s out” of the forthcoming “reconciliation” bill. BUT, we did have a pretty good idea, and based on this “good idea,” I explained to you that we will likely see things like a National Paid Leave program; 2-years of free college and pre-school; ACA improvements (relating to the premium subsidies and Medicaid expansion); adding vision, dental, and hearing benefits to traditional Medicare; increasing the Child Tax Credit; climate change; and immigration reforms. BUT NOW, we finally DO have some details on account of the “Budget Resolution” being publicly released and acted upon by the Senate. And based on these details, we can now discuss the health care policy changes that are slated to be included in the forthcoming “reconciliation” bill (starting with my initial thoughts below). Last comments on the “Budget Resolution:” Senate Democrats just approved the 2022 “Budget Resolution” (50 to 49).  This is an important event because as I have explained to you, to start the “reconciliation” process, a “Budget Resolution” MUST first be approved by BOTH the House and Senate (note, the House is coming back on Aug. 23rd to approve the “Budget Resolution”). It is important to emphasize that the “Budget Resolution” is NEVER law. Instead, a “Budget Resolution” is a blue-print of spending and revenue measures that Congress WANTS to enact into law at some point in the future. A “Budget Resolution” is also a procedural tool, something that is necessary for triggering the “reconciliation” process. Sooooooo, once the House passes the “Budget Resolution,” the Committees of jurisdiction in House and Senate will begin developing legislative language for all of the policies discussed in the Resolution (due on Sept. 15th), and this legislative language will then be rolled up into one big “reconciliation” bill (later in the Fall), which will then be run through the Senate Parliamentarian (in Oct. and Nov.), and then ultimately brought to the House and Senate floors for a final up-or-down vote (in Dec.). Now that we talked “process,” let’s talk about “details”…


Extending – But NOT Making Permanent – the Enhanced Premium Subsidies

  • Words matter. What I mean by that is this:
    • Analysis: For the past 6 months (ever since the American Rescue Plan was signed into law back in March), the Biden Administration and Congressional Democrats have been saying that they want to MAKE PERMANENT the enhanced premium subsidies. As I have been telling you, however, the more realistic policy change is a mere EXTENSION of the enhanced premium subsidies. WELLLLL, the summary of the “Budget Resolution” produced by the White House and Congressional Democrats confirm that we are NOT going to see efforts to make the enhanced premium subsidies PERMANENT. Rather, the words used in the “Budget Resolution’s” summary confirm that the enhanced premium subsidies will ONLY be EXTENDED for a period of years. Which begs the question: How long will the enhanced premium subsidies be extended? Unfortunately, we do NOT know exactly. BUT, we can speculate. For example, as I have told you, a provision in a “reconciliation” bill CANNOT increase the deficit outside of the 10-year budget window (i.e., year 11, or year 15, or year 20). As a result, provisions that may run afoul of this rule are limited to 10 years (i.e., the policy change is structured so that it goes away at the end of 10 years after enactment, and current law snaps back into place (unless the policy is extended yet again)). Based on this, it is fair to suggest that the Biden Administration and Congressional Democrats will seek to extend the enhanced premium subsidies for up to 10 years, and I expect that this is what we will see the actual text of the forthcoming “reconciliation” bill. BUT, if the Biden Administration and Congressional Democrats run into a “math/spending problem,” meaning they do NOT have enough “offsets” to pay for ALL of the spending called for under the forthcoming “reconciliation” bill, the extension of the enhanced premium subsidies may have to be pared back to 8 years or even 5 years. It really comes down to priorities. That is, if it is a priority to keep the extension at 10 years, the Biden Administration and Congressional Democrats will pare back spending in “other” areas or increase tax revenues to pay for the extension (or both).


“Medicare Expansion” – Adding Vision, Dental, and Hearing Benefits to Traditional Medicare

  • In prior updates, I queried:  What do policymakers mean when they say they want to “expand” Medicare? That is a reasonable question because there are a TON of ways you can “expand” Medicare. I went so far as to analyze some of the different ways Medicare could be “expanded” (for example, by talking about a Medicare Buy-In Program vs. Lowering the Medicare Eligibility Age).
    • Analysis: The recent release of the 2022 Budget Resolution sheds some light on the specific ways that the Biden Administration and Congressional Democrats want to “expand” Medicare. In particular, the summary of the “Budget Resolution” produced by the White House and Congressional Democrats calls for “expanding” Medicare by adding dental, vision, and hearing as traditional Medicare-covered benefits. Currently, the only way Medicare beneficiaries can get coverage for dental, vision, and hearing benefits is through supplemental coverage like a Medicare Advantage plan. Sooooooooo, with “adding” these new benefits to traditional Medicare, the Biden Administration and Congressional Democrats would effectively “expand” Medicare through the forthcoming “reconciliation” bill. The rub for the White House and Congressional Democrats is how will they pay for this type of “Medicare expansion” (because it will be costly)?


“Medicare Expansion” – Lowering the Medicare Eligibility Age

  • Interestingly – and importantly – the summary of the “Budget Resolution” ALSO indicates that the forthcoming “reconciliation” bill will include a proposal to Lower the Medicare Eligibility Age. BTW, I was somewhat surprised to see that Lowering the Medicare Eligibility Age made it onto the list. BUT at the same time, I was NOT surprised to see this. Why?
    • Analysis: First, over the past month or so, I have been hearing from folks that a Medicare Buy-In Program and Lowering the Medicare Eligibility Age were pretty much off-the-table, despite the continued “push” by progressive Democrats that such proposals should be pursued in the forthcoming “reconciliation” bill. As a result, I was prepared to NOT see either of these proposals to “expand” Medicare in the “Budget Resolution,” which is why I say that I was “somewhat surprised” to see that Lowering the Medicare Eligibility Age made the cut. BUT, considering the fact that Lowering the Medicare Age is such a HUGE priority for progressive Democrats – especially progressive Democrats in the House – I am “also not surprised” to see it. Think about it, if Lowering the Medicare Age was NOT on the list, then progressive Democrats would scream very loudly and make their displeasure known. The White House and Democratic Leadership knew this and wanted to prevent such a scenario playing out this early in process, and this is why I believe that Lowering the Medicare Age did indeed make it onto the list. Also, as I told you, the House MUST pass the “Budget Resolution” to start the “reconciliation” process. AND, without a proposal to Lower the Medicare Eligibility Age, there is a chance that some progressive Democrats would NOT vote in favor of the “Budget Resolution” itself. Soooooooo, to ensure smooth and quick passage of the “Budget Resolution” in the House come Aug. 23rd, Lowering the Medicare Age HAD to be included. In time, I expect that Lowering the Medicare Age will be dropped during the negotiations over “what’s in” and “what’s out” of the forthcoming “reconciliation” bill. BUT, that is a conversation for another day.


Drug Pricing Reforms In the Forthcoming “Reconciliation” Bill

  • This something that I 100% EXPECTED to see, although some policy analysts were not sure whether the Biden Administration and Congressional Democrats wanted to pick a fight with the drug manufacturers.
    • Analysis: What did the summary of the “Budget Resolution” say on this? The summary said that the forthcoming “reconciliation” bill will produce “Hundreds of billions in additional savings by lowering the price of prescription drugs.” YUP, that’s short-and-sweet, and that’s all that the summary said, which is NOT very helpful. BUT, as stated above – “words matter” – and these words are telling us that drug pricing reforms WILL FOR SURE be included in the forthcoming “reconciliation” bill. The rub is that we do NOT know what “types” of drug pricing reforms will make the cut.  Sooooooo, we are forced to play the speculation game, so here goes:
      • I think we can all bank on seeing a proposal that would allow HHS to negotiate the prices for Medicare payments for at least 50 and up to 250 brand-name prescription drugs that HHS deems to be lacking price competition.
      • I think we can also bank on seeing caps on drug price increases under Medicare Parts B/D that have risen more rapidly than inflation since a “benchmark year” (say 2019) and requiring drug manufacturers to either (1) lower the price of the drug to the inflation-indexed price or (2) pay the above-inflation amount back to the Treasury as a rebate. Here is something I am NOT sure whether we will see or not: Similar to the Trump Administration’s “Most Favored Nation” model, House Democrats supported (in H.R. 3, in the last Congress) a proposal that would limit the Medicare negotiated price to at least 120% of the highest price in 1 of 6 other industrialized nations (Australia, Canada, France, Germany, Japan, and the UK). HOWEVER, the Biden Administration has recently signaled that HHS will be scrapping the Trump-era “Most Favored Nation” model, which begs the question: Does this mean that we will NOT see this proposal in the forthcoming “reconciliation” bill? Maybe. But also maybe NOT. Why? Maybe the Biden Administration wants to scrap the Trump-era model because the White House wants to pursue ITS OWN version of the “Most Favored Nation” model, one that is more in line with what the House Democrats previously included in H.R. 3 (in the last Congress)? So maybe – at the end-of-the-day – we will ultimately see this proposal in the forthcoming “reconciliation” bill? Also, if the Biden Administration and Congressional Democrats need MORE money to pay for the spending under the “reconciliation” bill, we could certainly see this idea (or some form of it), despite the steps being taken to get rid of the Trump-era “Most Favored Nation” model. Last comment: Another drug pricing policy change that could be tapped by the White House and Congressional Democrats is this:  Extending the “price negotiations” and “inflationary caps” (discussed above) to employer-sponsored plans. This idea would certainly produce additional “savings” that could be used to pay for the forthcoming “reconciliation” bill. HOWEVER, moderate Democrats will likely say that price controls on prescription drugs for the private insurance market is a “slippery-slope” and “a-bridge-too-far,” and these moderate Democrats would likely withhold their support even if it means that they would be forcing Democratic Leadership to find other ways to pay for the $3.5 trillion price tag (or forcing Leadership to cut back on the overall price tag). In my opinion, this is a “sleeper” issue that could very well get more attention this Fall.  I will stay on top of it, so stay tuned…


Surprise Medical Billing Update

The July 1st IFR:  How Much Will the Insurance Carrier and Self-Insured Plan Pay (and When)?

  • Unfortunately, I do NOT have enough space left in this week’s update to talk about ALL of the rules set forth in the July 1st IFR explaining “How Much Will the Insurance Carrier and Self-Insured Plan Pay (and When).” For example, for purposes of this update, I will NOT be discussing how to determine the in-network median rate for a particular medical item or service furnished in a geographic region (known as the “Qualifying Payment Amount”). I will discuss those rules in my next update. I do, however, want to spend time talking about the “Timeframes” under the surprise billing payment process.
    • Analysis: In short, the July 1st IFR explains that there are 3 “Timeframes” that Congress established which are intended to ensure that billing disputes are resolved in a timely fashion. These “Timeframes” include: (1) Making an “Initial Payment” or sending a notice of denial of payment; (2) The “open negotiation” period; and (3) The Federally-developed arbitration/IDR process following an open negotiation period.
      • “Timeframe #1” – Making an Initial Payment or Denial of Payment: After an out-of-network provider furnishes medical items or services to a covered individual, the provider will send a bill to the insurance carrier or self-insured plan for any “excess” of (A) the amount billed by the out-of-network provider for the medical items or services furnished and (B) what the covered individual paid. Once the carrier/plan receives the bill from the provider, the carrier/plan has 30 days to either choose to send to the provider (1) an “Initial Payment” or (2) a denial of the payment. As I explained in prior updates, the term Initial Payment is NOT defined in the statute.  Importantly, the July 1st IFR CONTINUES to leave the term Initial Payment UNDEFINED. Interestingly, however, the Federal Departments did suggest that a minimum payment rate could be developed. For example, the Departments suggest that a minimum payment rate could be a specific percentage of Medicare, a specific percentage of the plan’s in-network median rate for the item or service (i.e., the Qualifying Payment Amount), or an amount determined based on other methodologies. The Departments requested comments on this “minimum payment” idea.
      • “Timeframe #2” – The Open Negotiation Period: Once the carrier/plan decides to (1) make an Initial Payment or (2) send a notice of denial of payment, the carrier/plan and provider may – over another 30-day period – enter into an open negotiation to attempt to resolve any dispute. In cases where the carrier/plan and the provider CANNOT agree on a total and final payment amount, the carrier/plan OR the provider may choose to utilize the Federally-developed arbitration/IDR process in cases where a State surprise billing law does NOT apply (because, for example, there is NO State surprise billing law on the books; or the State law only applies to certain payers, providers, and/or medical items and services; or the out-of-network care is furnished out-of-State where no State surprise billing law exists). If a carrier/plan or provider wants to utilize the Federally-developed arbitration/IDR process, they have 4 days after the end of the 30-day open negotiation period to initiate the arbitration/IDR process.


“Timeframe #3” – Federally-Developed Arbitration/IDR Process: The July 1st IFR does NOT include any rules relating to the Federally-developed arbitration/IDR. However, as stated in my last update, we are expecting an Interim Final Rule on the Federally-developed arbitration/IDR process some time in early-September, possibly between Sept. 1st and 3rd, because the Federal Departments LOVE dropping regs right before a holiday, here, Labor Day.