by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
Can the Biden Administration and Congressional Democrats Enact the $3.5 Trillion “Reconciliation” Bill?
- This is the $3.5 trillion dollar question being asked on the streets of Washington, DC.
- Analysis: It’s a reasonable question to ask because one of the last times the majority party in Congress tried to enact changes through a “reconciliation” bill (cough, cough…ACA repeal and replace), the majority party FAILED. Sooooooo, there is NO guarantee that the $3.5 trillion dollar “reconciliation” bill will make it across the finish line. BUT, I would be SHOCKED if the Democrats failed (but admittedly, that is what I was saying about ACA repeal and replace (i.e., I thought it was pretty much a done-deal)). So what happens now? Well, as stated in my last update (included below if you want to take another look), the legislative Committees of jurisdiction in both the House and Senate are directed to finish drafting legislative language by Sept. 15th. Then, the Committees of jurisdiction are supposed to debate and approve the language shortly thereafter. Then, House and Senate Leadership will combine ALL of the language into one, single “reconciliation” bill that will be brought to the House and Senate floors for an up-or-down vote. Congressional Democrats (and in particular, progressive Democrats in the House) want to vote on this “reconciliation” bill by Oct. 1st. BUT, that ain’t gonna happen because the “process” will NOT allow for it. In other words, the “process” is going to take MUCH MUCH longer than just 2 weeks. Why? Well first, it is going to be SUPER difficult to get ALL 50 Democratic Senators to YES (for example, Sen. Sinema (D-AZ) already indicated that a $3.5 trillion price tag is too high). Then, you have at least 10 – if not more – moderate Democrats in the House who already flexed their muscles (and successfully secured a vote on the “Hard Infrastructure” Package by Sept. 27th) who – similar to Sen. Sinema – do NOT want to spend $3.5 trillion. Consensus-building (i.e., arm-twisting) ain’t easy. In the end, this arm-twisting may get everyone to YES. BUT, it takes a LOOONNNNGGG time. Second, the Senate Parliamentarian is staring you in the face. What I mean is, the legislative language that the Committees of jurisdiction are currently drafting will NOT be the final product. This language must be reviewed by the Senate Parliamentarian, and there is a 110% chance that some of the language will VIOLATE the “reconciliation” rules, which will require re-drafting or dropping the language altogether. Then, if you drop the language altogether, you are back to consensus-building (i.e., arm-twisting) to get those members who supported the discarded language to remain in the YES column. The bottom-line is that it is going to be a MESS. It always is a MESS. It was a MESS when the ACA was originally enacted through the “reconciliation” process (when the numbers were much more favorable for the majority party at the time). And more recently, we all saw how much of a MESS the ACA repeal and replace exercise was, in addition to Tax Reform 2017. As I always like to say, grab your popcorn. This time an XL (or even XXL). You will need it for the long, drawn-out drama we are all about to experience over the next 4 months.
Health Care Policy/Transparency Update
The “Other” Provisions of the No Surprises Act
- Although the No Surprises Act includes robust protections against surprise medical bills – and the No Surprises Act creates a structured “surprise billing payment process” that insurance carriers, self-insured plans, and medical providers must now follow (which I have already discussed with you at-length) – there are a number of “other” provisions that were included in the Act that have NOT gotten a lot of attention.
- Analysis: These “other” provisions of the No Surprises Act include:
- A Price Comparison Tool
- Listing In-Network and Out-of-Network Deductibles and Out-of-Pocket Limits on Insurance ID Cards
- Improving and Updating Provider Directories
- Notifications from Medical Providers to Insurers/Self-Insured Plans With Information Relating to Medical Procedures/Services Scheduled In Advance
- The Advanced Explanation of Benefits (AEOB)
- Prohibiting “Gag Clauses” on the Disclosure of Price, Claims, and Quality Information
- Information Reporting on Prescription Drug Rebates and Costs
- Disclosing Direct and Indirect Compensation Paid to Brokers and Benefits Consultants
- An “Analysis” Comparing Limitations/Restrictions Placed on Mental Health Benefits With Other Covered Benefits
All of these “other” provisions (with the exception of the prohibition against “gag clauses” and the mental health parity “analysis”) are effective at the end of 2021 (i.e., Dec. 27, 2021) or the beginning of 2022 (i.e., Jan. 1, 2022).
Duplication and Overlap of the No Surprises Act With the Transparency In Coverage Regulations
- Dating back to 2018 (and even before that), both Congress and the Federal Departments wanted to pursue policies to increase the transparency of health claims, medical prices, and quality of care.
- Analysis: Because it takes FOREVER to get anything through Congress, the Federal Departments decided to chart their own course on increasing transparency in these areas. This led to the previous Administration releasing:
- The “Interoperability” regulations (requiring the sharing of health claims data with Medicare and Medicaid beneficiaries, along with “individual” market Exchange planholders)
- The “Hospital Transparency” regulations (requiring hospitals to publicly disclose certain medical prices)
- The “Transparency In Coverage” (or “Health Plan Transparency”) regulations (requiring insurance carriers and self-insured plans to publicly disclose certain medical prices and provide cost-sharing liability information to policyholders/participants upon their request).
BUT, notwithstanding the release of these very detailed regulations, Congress STILL went through with enacting similar policies. And frustratingly, Congress did not – and could not – get as detailed as the Federal Departments did in their regulations (due to “politics” and successful lobbying efforts). In addition, the sausage-making process in Congress – and even within the Federal Departments – resulted in different effective dates for these virtually identical policy changes. As a result, stakeholders have been faced with attempting to comply with new regulatory requirements that are very similar – if not virtually identical – to newly enacted statutory requirements with, in some cases, different effective dates. This required the Federal Departments to step-in and explain how the regulatory and statutory requirements will be coordinated. In addition, due to the complexity of complying with both the regulatory and statutory requirements – especially in the absence of implementing guidance/regulations – the Federal Departments had no choice but to delay the enforcement of some of the new regulatory and statutory requirements. Enter-stage-left…the FAQs released last Friday, which I discuss more fully below. But before I talk about the FAQs, let me touch on these lawsuits…
Lawsuits Challenging the “Machine-Readable” File Requirement In the Transparency In Coverage Regulations
- The U.S. Chamber of Commerce and the Pharmaceutical Care Management Association (PCMA) filed lawsuits to invalidate portions of the Transparency In Coverage regulations.
- Analysis: Their main legal argument: The requirement that insurance carriers and self-insured plans must disclose their (1) negotiated in-network rates, (2) out-of-network allowed amounts, and (3) the in-network rates and net historical price of prescription drugs covered by the carrier/plan through “machine-readable” files is INCONSISTENT with the statute, and thus, the Federal Departments exceeded their authority in developing this “machine-readable” file requirement, and therefore, the “machine-readable” file requirement MUST be invalidated by the court. Why does the Chamber and PCMA think the “machine-readable file” requirement is INCONSISTENT with the statute? Because the statutory basis for developing the Transparency In Coverage regs is grounded in the ACA which states that information must be disclosed in “plain language.” AND, the Chamber and PCMA contend that “machine-readable” files are NOT “plain language.” Stated differently, the Chamber and PCMA argue that the requirement to disclose the pricing information through “machine-readable” files does NOT satisfy the statutory standard that this information be disclosed in “plain language.” Importantly, if the “machine-readable” file requirement is indeed invalidated, this would gut the regulatory effort to force insurance carriers and self-insured plans to PUBLICLY disclose the medical prices noted above. This would certainly be a WIN for the insurance carriers and the PBMs who have been trying desperately to keep these medical prices hidden from the public. Note, the insurance carriers and the PBMs indicate that they are supportive of increasing the transparency of medical prices. However, the carriers and PBMs do NOT want this information made public (because they don’t want their competitors to see this information). Instead, the carriers and PBMs would prefer that this information be shared directly with the “end-user,” which is the employer and the employee (in the case of a “group health plan”) and the individual (in the case of an “individual” market plan). I will expand on this in a future update, but I think the Chamber’s and PCMA’s legal argument relating to the “machine-readable” file requirement is a loser. Yes, maybe a court grants an injunction until the court can figure out how best to rule. And maybe even a District Court agrees that the “machine-readable” file requirement is indeed INCONSISTENT with the statute. BUT, I am skeptical that a Circuit Court would agree. Sooooooo, I am expecting that the Transparency In Coverage regs will largely remain intact. We’ll just have to wait and see. BUT, while we wait, I do believe that insurance carriers and self-insured plans MUST continue to take steps to comply with the requirement to publicly disclose the information noted above on “machine-readable” files until carriers/plans are told they do NOT have to comply. Which, leads into my discussion of the FAQs issued last Friday…
The FAQs and the “Machine-Readable” File Requirement
- In the FAQs, the Federal Departments delayed the enforcement of the “machine-readable” file requirement for the (1) negotiated in-network rates and (2) out-of-network allowed amounts, and separately, delayed the enforcement of the “machine-readable” file requirement for disclosing the in-network rates and net historical price of prescription drugs covered by the plan.
- Analysis: Let me first say this: I believe that the lawsuits discussed above had an impact on the Federal Departments’ decision to delay the enforcement of the “machine-readable” file requirements. BUT, I do NOT believe the lawsuits are the entire reason for the delayed enforcement. Let me explain what I mean: First, with respect to the “machine-readable” file requirement for the (1) the negotiated in-network rates and (2) the out-of-network allowed amounts, the Federal Departments ONLY delayed enforcement of this requirement for 6 months. In other words, the requirement to post on a public website the “machine-readable” files for the (1) negotiated in-network rates and (2) out-of-network allowed amounts will ONLY be delayed until July 1, 2022, which tells me that the Federal Departments are NOT spooked by the lawsuits and the Departments intend to start enforcing the public disclosure of this information sooner rather than later. To me, the Departments simply recognized the complexities and difficulties associated with complying with the “machine-readable” file requirement in the first place. I also think that this 6-month delay was announced so the Departments can “buy themselves time” to issue a supplement to the Transparency In Coverage regulations, explaining how and why the “machine-readable” file requirement does indeed satisfy the “plain language” requirement in the statute. This “supplement” would be used to defend against the Chamber’s and PCMA’s lawsuits. With respect to the requirement to disclose the in-network rate and the historical net price for prescription drugs on a “machine-readable” file, enforcement of this requirement will be delayed until the Federal Departments issue newly proposed regulations implementing (or rescinding) this requirement, meaning, carriers/plans do NOT have to put together this “machine-readable” file until the Federal Departments issue implementing regulations (so this is more of an indefinite delay, as opposed to a time-restricted delay discussed above). Note, I say “rescinding” above because I think there is a chance that the “machine-readable” file requirement for prescription drugs (which makes up the “Prescription Drug File”) is rescinded through forthcoming regulations. Why? Because this Prescription Drug File was NOT included in the proposed Transparency In Coverage regulations. Instead, this requirement was added to the final regulations. And, because stakeholders did NOT have a chance to comment on this Prescription Drug File (and the “machine-readable” file requirement) this violates the notice-and-comment period rules, which is something that the Chamber and PCMA raised in their lawsuit, which I think is a winning argument. Same with the requirement to disclose the “net historical” price (this was NOT in the proposed regulations, but added through the final regs). Sooooo, I could see both of these aspects of the Transparency In Coverage reg falling out (either by a court ruling, but more likely by a proposed reg issued by the Federal Departments). That’s why I said in my previous post that I expect that the Transparency In Coverage regs will “largely remain intact” (i.e., I am not certain that ALL of the regs will remain intact).
The FAQs: The Price Comparison Tool vs. Cost-Sharing Liability Tool
- The Price Comparison Tool under the No Surprises Act requires insurance carriers and self-insured plans to allow policyholders/participants – through telephone AND through an Internet website – to compare the amount of cost-sharing they would be responsible for paying for a particular medical item or service. The Cost-Sharing Liability Tool requirement under the Transparency In Coverage regulations must allow policyholders/participants to request their cost-sharing liability for a particular medical item or service through an on-line tool or in paper form.
- Analysis: While the statutory language for the Price Comparison Tool under the No Surprises Act is very simplistic – compared to the Cost-Sharing Liability Tool requirement under the Transparency In Coverage regulation which is very detailed – the disclosure under the Price Comparison Tool is virtually the SAME as the Cost-Sharing Liability Tool. Based on this point, I have always suggested that it would make sense for Federal Departments to combine these virtually identical requirements. The Federal Departments seem to agree. In short, the FAQs announced that the Departments will issue proposed regulations asking whether compliance with the Cost-Sharing Liability Tool regulatory requirement starting January 1, 2023 will also allow carriers/plans to be in compliance with the Price Comparison Tool statutory requirement. The Departments will also include in these proposed regulations a requirement that any cost-sharing liability information must also be provided over the telephone upon request (which is consistent with the statute), in addition to being made available through an online tool or in paper form (which is consistent with the regulations). For the 2022 plan year, the Federal Departments will NOT enforce the Price Comparison Tool statutory requirement, and instead, the Departments will focus on compliance assistance. This non-enforcement period is grounded in the Departments’ recognition that carriers/plans are already taking steps to comply with the Cost-Sharing Liability Tool regulatory requirement starting January 1, 2023, meaning if carriers/plans are NOT taking steps to comply with the Cost-Sharing Liability Tool requirement during the 2022 plan year, the Departments could take action against the carrier/plan.
The FAQs: In-Network and Out-of-Network Deductibles and Out-of-Pocket Limits Disclosed on ID Cards
- Under the No Surprises Act, an insurance carrier and self-insured plan must include on any physical OR electronic plan OR insurance ID card (1) the policyholder’s/participant’s in-network and out-of-network deductibles, (2) the ACA’s out-of-pocket maximum limits, and (3) the telephone number and website through which the policyholder/participant can seek assistance on plan-related issues, including when a provider is in-network or out-of-network.
- Analysis: In the FAQs, the Federal Departments confirmed that they will NOT be issuing implementing guidance/regulations on this “ID card” requirement until sometime AFTER Jan. 1, 2022. Until guidance/regulations are released, carriers and plans MUST implement this ID card requirement using a good faith, reasonable interpretation of the statute. I highlighted the word OR above because questions have been raised as to whether a carrier/plan MUST include the required information on the ID card AND ALSO other plan document information. Based on my own good faith, reasonable interpretation of the statute, the word OR tells me that the required information need ONLY be included on the ID card, and that the ID card can either be a “physical” card OR an “electronic” card. The Federal Departments seemed to confirm my thinking in the FAQs when the Departments said that a carrier/plan would be deemed to be in compliance this ID card requirement if the carrier/plan includes the required information on “any physical OR electronic ID card issued to participants.”
The FAQs: The AEOB and the Provider’s “Good Faith Estimate” Notification
- The timing for sending an AEOB to policyholders/participants is dependent on when an insurance carrier/self-insured plan receives a notification from a medical provider of a “scheduled” medical procedure/service. The provider must also furnish the carrier/plan with a “good faith estimate” of the cost of the “scheduled” medical procedure/service, which is a required piece of information that a carrier/plan must include in the AEOB.
- Analysis: In the FAQs, the Federal Departments explained that guidance/regulations implementing the “good faith estimate” notification will NOT be issued until sometime AFTER Jan. 1, 2022. The Departments further indicated that until guidance/regulations are issued, the Federal Departments will NOT enforce this “good faith estimate” notification requirement, and any forthcoming implementing guidance/regulations will have a prospective applicability date. Similarly, the Federal Departments recognized that compliance with the AEOB requirement by Jan. 1, 2022 is NOT possible without the “good faith estimate” that medical providers must send to a carrier/plan. As a result, until the Federal Departments issue guidance/regulations implementing both the “good faith estimate” and AEOB requirements, the Departments will NOT enforce the requirement that carriers/plans must send an AEOB to participants. To me, this means that carriers/plans are NOT required to send an AEOB to policyholders/participants until the Departments issue implementing guidance/regulations. The Departments did NOT indicate when we might see implementing guidance/regulations.
The FAQs: Prohibiting “Gag Clauses” on the Disclosure of Price, Claims, and Quality Data
- Congress – through No Surprises Act – said that NO agreement between (1) an insurance carrier or a self-insured plan and (2) a medical provider, network or association of providers, third-party administrator, or other owner of a provider network shall include a “gag clause” restricting access to medical prices, health claims data, and quality of care information. The prohibition against these “gag clauses” is effective now (i.e., the effective date was December 27, 2020).
- Analysis: In the FAQs, the Federal Departments indicated that this new requirement is “self-implementing,” meaning that it is the responsibility of the carrier/plan and the provider or owner of a provider network to re-draft their agreements and eliminate any “gag clauses” that may be present. The Federal Departments also noted that a carrier/plan and provider or owner of a provider network are expected to implement this prohibition using a good faith, reasonable interpretation of the statute.
The FAQs: Updating and Improving Provider Directories
- Every 90 days, an insurance carrier and a self-insured plan must verify if its provider directory is up-to-date (by removing providers that are no longer in-network and adding those providers that become in-network providers through a new network agreement). A carrier/plan must also respond to a participant who requests – through a telephone call, email, or web site – information on whether a particular provider is in-network. The up-to-date provider directory must also be in the form of a database that is posted on a public website.
- Analysis: In addition, if a participant consults the database or is furnished a copy of the provider directory, but it turns out that the in-network provider that was listed on the database/directory is no longer in-network, the cost-sharing for the out-of-network services must equal the cost-sharing for in-network services. The FAQs confirm that the Federal Departments will NOT be issuing implementing guidance/regulations on this provider directory requirement until sometime AFTER Jan. 1, 2022. Until guidance/regulations are released, carriers/plans MUST implement this requirement using a good faith, reasonable interpretation of the statute. I will note, this provision also requires a carrier/plan to post on a public web site – and include on each EOB – an explanation of the Federal surprise billing protections (or State law surprise billing protections, if applicable), along with a statement that participants can contact State or Federal regulators if the participant believes that the provider has violated the Federal/State surprise billing protections. The Departments already issued a model notice/statement to comply with this requirement.
The FAQs: Reporting Prescription Drug Information to the Federal Government
- The No Surprises Act requires insurance carriers and self-insured plans to report to the Federal government specific and detailed information about the cost of the prescription drugs covered by the carriers/plans, as well as rebates, discounts, or fees.
- Analysis: Recognizing the complexity associated with compiling and reporting this information, the Federal Departments will NOT enforce this reporting requirement until at least Dec. 27, 2022 (one year after the statutory effective date). To me, this means that carriers/plans are NOT required to submit their first reports on Dec. 27, 2021 and the annual report on June 1, 2022. However, the Departments encouraged carriers/plans to start working toward being able to report the required information with respect to 2020 and 2021 data by December 27, 2022 (which means that the annual report on June 1, 2023 will likely also be due). Interestingly, when announcing the indefinite delay of the “machine-readable” file requirement (which as stated above, makes up the Prescription Drug File), the Federal Departments justified the delay by suggesting that carriers/plans must report some of the same prescription drug pricing information under the No Surprises Act’s reporting provision as is required to be disclosed through the Prescription Drug File. BTW, I do NOT buy this justification. The “machine-readable” file/Prescription Drug File is intended to require the PUBLIC disclosure of drug pricing information so participants, employers, researchers, entrepreneurs, etc. can access the information. This reporting provision under the No Surprises Act is merely a requirement for carriers/plans to report certain information to the Federal government. And, the statute specifically says that any information that the Federal government makes available to the public based on the carriers’/plans’ reports “must aggregate the information in such a way so as to ensure that no drug-specific information is made public.” Come on people, if you want to get rid of the requirement to make the Prescription Drug File public, just say so…