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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

  • Let’s get our terminology straight: “Hard Infrastructure” is funding for roads; bridges; public transportation; broad-band; etc. “Soft Infrastructure” is 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: I will try not to bore you with all of the details of the ongoing soap opera here in Washington, DC, but let me say this: President Biden and the White House do believe in bi-partisanship. AND, they also realize that if “Hard Infrastructure” is NOT enacted on a bi-partisan basis, then the following will likely happen:
      • There will be a civil war within the Democratic party to include a number of progressive policy proposals in what would have to be a COMBINED “Hard Infrastructure”/“Soft Infrastructure” Democrat-only reconciliation bill, which could sink that COMBINED bill (because moderate Democrats in both the House and Senate may reject some of those progressive policies, and progressive Democrats in both the House and Senate may reject any compromises with moderates). That would result in a BIG “goose egg” for the Democrats, meaning NO “Hard Infrastructure,” which is very popular with the American public, which could produce BAD results in the upcoming 2022 mid-term elections. Sooooooo, President Biden and the White House are walking the fine line between trying to get a bi-partisan “Hard Infrastructure” deal enacted (so the White House can say to the American public that President Biden can “get stuff done”), while also trying to appease progressive Democrats in Congress by supporting a “Soft Infrastructure” Democrat-only reconciliation bill that would be acted upon AFTER the bi-partisan “Hard Infrastructure” deal is signed into law (so the White House can show the Democratic-base that the President “has their back”). That’s why we are seeing this 2-track “play” here. It’s a political balancing for sure. And if President Biden and the White House can pull off getting BOTH the “Hard Infrastructure” bi-partisan deal – AND – the “Soft Infrastructure” Democrat-only reconciliation bill across the finish line by the end of 2021, they should be commended (because again, they showed the American public that they can work with Republicans, while also giving progressive Democrats some key wins…both of which will bode well for the Democrats in the 2022 mid-terms). BUT, this 2-track “play” could very well crash-and-burn at some point between now and December 31st, which could not only turn the American public against President Biden and the White House, but progressive Democrats will be none-too-happy with the President/White House and moderate Congressional Democrats. That would cause problems come Nov. 2022.

What’s the Latest on This 2-Track “Play”?

  • As you are reading in the news, the “Hard Infrastructure” deal could be signed into law some time in August, despite some recent bumps-in-the-legislative-road. If that happens, then Congressional Democrats – along with President Biden and the White House – will quickly turn to solidifying support for the “Soft Infrastructure” Democrat-only reconciliation bill (which MUST get all 50 Senate Democrats and virtually all of the House Democrats).
    • Analysis: Solidifying support for the “Soft Infrastructure” Democrat-only reconciliation bill is NOT going to be easy, illustrated by my comments above about the possibility that (1) moderate Democrats may NOT support some of the progressive policy proposals included in the “Soft Infrastructure” package and (2) progressive Democrats may NOT want to compromise. Note, Congressional Democrats will ALSO have to “process” the “Soft Infrastructure” Democrat-only reconciliation bill through the House and Senate Committees of jurisdiction, which takes time and is messy, as Congressional Republicans will surely pounce on many of the progressive policies included in the package, all in an effort to exploit recent polling showing that the American public increasingly thinks the Democratic party is too liberal (all in an effort to win back the majority in the House and/or Senate in 2022). MOST IMPORTANTLY, Congressional Democrats will have to get a Yea or Nay from the Senate Parliamentarian on whether any and all of the proposals included in the “Soft Infrastructure” Democrat-only reconciliation bill satisfy the reconciliation rules. That will also take time, and it won’t be without controversy. All of this tells you the following: Come Labor Day, things are going to get CRAZY busy as we continue to watch this soap opera unfold, especially if the bi-partisan “Hard Infrastructure” deal ends up falling apart. Either way, get some rest over these last few weeks of the Summer and buckle-up…

 

Transparency Update

HHS Wants to Increase the Penalties for Non-Compliance With the Hospital Transparency Regulations

  • Well, that didn’t take long…
    • Analysis: As I mentioned in my last update, President Biden’s July 9th Executive Order (EO) included a specific direction to HHS to “support existing hospital price transparency rules,” which – as stated – is “code” for the White House telling HHS that the Department better start enforcing and faithfully implementing the hospital transparency requirements. As I also mentioned, one of the main reasons – if not the #1 reason – for hospital non-compliance is due to the fact that the penalty amount is ridiculously low ($300 per day during the period of non-compliance, with a maximum penalty of $109,500 for the full year). Recognizing this anomaly, the Biden Administration’s HHS finally said “NO MAS…we WANT hospitals to comply with the hospital transparency regulations, and if that means that we have to increase the penalties for non-compliance, we are going to do it.” Sooooooo, HHS issued proposed regs increasing the penalty for non-compliance for hospitals with more than 30 beds to $5,500 per day (with a maximum penalty of $2,007,500 for the full year). Hospitals with 30 beds or less will still have the $300 per day penalty/$109,500 penalty for the full year. Interestingly, HHS is asking for public comments on whether the maximum penalty amount should be even HIGHER for certain hospitals. For example, should the penalty be increased based on a hospital’s revenue?  Should the penalty be increased based on the nature, scope, severity, and/or duration of non-compliance? Other reasons for non-compliance? BTW, I do NOT see HHS increasing the penalties any further than the proposed $2,007,500. BUT, the fact that HHS is even suggesting the possibility that the Department may develop even HIGHER penalty amounts should get the attention of those hospitals who may still be saying that the $2,007,500 is chump change.

What Else Does HHS Want To Do To the Hospital Transparency Regulations?

  • As I have said previously, if the Biden Administration is going to somehow “change” the hospital transparency regs, the Administration will NOT rescind or water down the regs, but instead, the Biden Administration will take steps to streamline, refine, and improve the regs.
    • Analysis: In addition to requesting comments on whether and how to increase the penalties for non-compliance, HHS asked stakeholders to submit comments suggesting “best practices” for developing an on-line price estimator tool that hospitals can use for disclosing the prices they charge for 300 “shoppable” medical items or services (as you may know, the on-line estimator tool can be used instead of posting the charges for the 300 “shoppable” medical items or services on a public web site). HHS also requested comments on how to improve the “machine-readable files” that hospitals must use to publicly disclose specific pricing information on a web site (including, among other information, the rates for medical items and services negotiated with specific insurance carriers and self-insured plans). I highlight these 2 areas where HHS is asking for comments to draw some parallels with the “health plan” transparency regulations (which as you know, requires carriers and self-insured plans (1) to publicly disclose their negotiated in-network rates on a website, using a “machine-readable file” and (2) to give participants/policyholders access to an “on-line tool” that can show the participant’s/policyholder’s cost-sharing liability for a particular medical item or serve). I also highlight these 2 areas because – at least in my opinion – if HHS wants to improve the hospital transparency regs when it comes to (1) an “on-line tool” and (2) “machine-readable files,” HHS is ALSO looking to improve upon these same 2 areas when it comes to the health plan transparency regs. Sooooooo, if you are a carrier or a self-insured plan (or a service provider to carriers and/or self-insured plans, or an entrepreneur, or anyone else who cares about this stuff), you may want to consider submitting public comments to HHS even though you are commenting on the hospital transparency regs (because again, there is an inter-relationship between the hospital and health plan transparency regs that HHS would like to leverage when developing and implementing the rules for each respective reg). Also, if you are a carrier or a self-insured plan (or a service provider to carriers and/or self-insured plans, or an entrepreneur, or anyone else who cares about this stuff), get ready for some proposed regulations on the health plan transparency regs some time in 2022 and 2023 with similar requests for comments, in addition to other suggestions intended to streamline, refine, and improve these transparency regs.

 

Surprise Medical Billing Update

The July 1st Interim Final Rule (IFR)

  • As I told you in my last update, on July 1st, the Federal Departments issued an IFR implementing portions the surprise medical billing requirements.
    • Analysis: As I also told you, the July 1st IFR primarily focuses on what I continually call the “surprise medical billing payment process.” In particular, (1) How to determine how much the patient will pay – AND – (2) How to determine how much an insurance carrier or self-insured plan will pay (and when). For purposes of this update, I am ONLY going to focus on HOW MUCH THE PATIENT WILL PAY, with additional commentary on when a State surprise billing law will apply – AND – when the Federal surprise billing requirements will apply. I will be following up with another update discussing HOW MUCH THE CARRIER/SELF-INSURED PLAN WILL PAY (which I will circle back with soon).

How Much Will the Patient Pay?

  • After a medical item or service is furnished by an out-of-network provider (1) during an emergency or (2) at an in-network facility, the patient is ONLY responsible for paying to the out-of-network provider the portion of the “Recognized Amount” for which the participant is responsible based on the cost-sharing requirement that would apply if the medical item or service was furnished by an in-network provider.
    • Analysis: To put this latter point into perspective, the IFR explains that if the cost-sharing for an in-network service (furnished by an in-network provider) is 20%, the cost-sharing for the out-of-network service (in the scenarios noted above) must also be 20%. However, the IFR also clarifies that if a patient has not met their deductible yet, the patient is responsible for paying the entire cost of the out-of-network service before their deductible is met. For example, if the cost of a particular medical item or service furnished by an out-of-network provider in these cases is $1,000, but the participant has a $1,500 deductible – none of which the patient has paid any amounts toward – the patient is responsible for paying $1,000 (not 20% of the $1,000 bill). But note, once the participant meets their deductible – and when the plan’s coverage and cost-sharing kicks in – the 20% cost-sharing (as stated above) would apply. Also note, any payments made to an out-of-network provider in these cases must be counted toward the participant’s in-network deductible and out-of-pocket maximum limits. Now, here is where things get a bit technical: The “Recognized Amount” that the patient is required to pay all or a portion of is defined as being equal to one of the following three amounts:
  1. If the medical item or service is furnished in a State that has in effect a surprise medical billing law, the amount shall be determined by that State surprise billing law;
  2. If the medical item or service is furnished in a State that has NO State surprise billing law, the amount shall equal the “Qualifying Payment Amount” (which is defined as the in-network median rate for a particular medical item or service in a geographic region);
  3. If the medical item or service is furnished in a State that has an All-Payer Model Agreement, the amount shall equal an amount approved by the State under that system.

Note, the only 2 States with an All-Payer Model Agreement are Maryland and Vermont. As a result, we are going to ignore #3 above because #3 ONLY applies in 2 jurisdictions. That leaves us with #1 and #2, which requires me to talk through (1) cases where State law will apply – AND – (2) cases where Federal law will apply. It also requires me to explain what a self-insured plan participant will pay, which is where I will start because it is straight-forward (well, sort of).

How Much Will a Self-Insured Plan Participant Pay?

  • The IFR confirms that ERISA preempts a State surprise medical billing law.  As a result, the IFR confirms that a self-insured plan participant will pay to an out-of-network provider the portion of the “Qualifying Payment Amount” (i.e., the in-network median rate for the particular medical item or service in a geographic region) for which the participant is responsible based on the cost-sharing requirement that would apply if the medical item or service was furnished by an in-network provider.
    • Analysis: Using our example above, if the self-insured plan participant already met their deductible, the participant would only pay 20% of the in-network median rate for the medical item or service furnished in a geographic region (i.e., the “Qualifying Payment Amount”). I will note, while the IFR confirms that ERISA preempts a State surprise billing law, the IFR allows a self-insured plan to voluntarily “opt in” to a State surprise billing law, in cases where a State law permits such an “opt in.” In the event a self-insured plan “opts in” to the State law, the plan MUST follow ALL of the surprise billing protections set forth under that State law. So in essence, in cases where a self-insured plan “opts in” to a State surprise billing law, the self-insured plan will be treated like an insurance carrier and the plan must follow State law where applicable (as I discuss more fully below).

How Much Will a Fully-Insured Plan Participant Pay?

  • As noted above, if a State surprise billing law applies, then a fully-insured plan participant will pay to an out-of-network provider the portion of the amount that is determined by that State surprise billing law.
    • Analysis: Using our example above, if the participant already met their deductible, the participant would only pay 20% of the amount determined by the State law. That’s pretty straight-forward. BUT, there are a number of nuances that the IFR points out where Federal law will apply even in States with a State surprise billing law on the books.

When Does a State Surprise Billing Law Apply – AND – When Does Federal Law Apply?

  • To answer this question, the IFR clarifies for us the following:
    • Analysis: First, in cases where a State surprise billing law ONLY applies to specific “payers” (e.g., the law only applies to HMOs), those non-HMO insurance carriers who are NOT subject to the State surprise billing law will follow the Federal surprise billing requirements. Soooooo, using our example above – and assuming we are in a State that has a surprise billing law that ONLY applies to HMOs – the participant of a fully-insured plan underwritten by a non-HMO insurance carrier would only pay 20% of the “Qualifying Payment Amount” (i.e., the in-network median rate for the medical item or services furnished in a geographic region). Second, if a State surprise billing law does NOT apply to certain medical providers (e.g., the State law does NOT apply to out-of-network neonatal doctors), the Federal surprise billing requirements would apply to the services provided by, for example, a neonatal doctor. Soooooo, using our example above – and assuming we are in a State that has a surprise billing law that ONLY applies to certain providers – the participant in this case would only pay 20% of the “Qualifying Payment Amount” (i.e., the in-network median rate for the medical item or services furnished in a geographic region). Third, if a State surprise billing law applies to emergency services, but the law does NOT apply to, for example, post-stabilization services, then the State law would apply to the emergency services – AND – the Federal surprise billing rules would apply to the post-stabilization services. So again, using our example above – and assuming there are charges related to post-stabilization services that are NOT covered by the State surprise billing law – the participant would only pay 20% of the “Qualifying Payment Amount” (i.e., the in-network median rate for the medical item or services furnished in a geographic region) for these post-stabilization services. Fourth – and I think this one is the most important because it is likely to come up a lot – if an insurance carrier is licensed in State A and is providing coverage to a participant who lives in State A, BUT the out-of-network provider furnishing the medical items or services to this particular participant is located and licensed in State B, State A’s surprise billing law would NOT apply – and instead – the Federal surprise billing requirements would apply (because State A’s law CANNOT reach into State B). So, using our example above, because State A’s law CANNOT reach into State B, the insurance carrier here must follow the Federal surprise billing requirements irrespective of whether the participant lives in State A and the insurance carrier is domiciled in State A, and thus, this participant would only pay 20% of the “Qualifying Payment Amount” (i.e., the in-network median rate for the medical item or services furnished in a geographic region).