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Reconciliation Update

Reconciliation Update

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

Yes, Multiple “Reconciliation” Bills Are Allowed, But It Don’t Come Easy

  • BTW, I never expected that I would be talking about the “reconciliation” process so much this year. Yes, I started speculating back in October 2020 on how the “reconciliation” process might be used if the Democrats controlled all of Washington, DC after the November elections. AND, when it became clear that Senate Democrats did NOT have 60 votes to pass the COVID Stimulus Package (i.e., the American Rescue Plan) back in February/March, I discussed whether and how the Biden Administration and Congressional Democrats would and could pass the American Rescue Plan as a “reconciliation” bill.
    • Analysis: BUT, I never expected to see efforts to amend the “reconciliation” rules to, for example, pursue multiple “reconciliation” bills within a particular fiscal year. Over-ruling the Parliamentarian, yes, I could see that possibility. But NOT multiple “reconciliation” bills.  So what’s the latest drama? Well, as I noted in my update from Thursday before Memorial Day, there were reports that Senate Democrats may by-pass the opportunity to amend the “reconciliation” rules to add a 2nd “reconciliation” bill to the 2021 fiscal year. Then, on the following day (Friday), as everyone was getting out of their respective towns to enjoy the holiday weekend, the Senate Parliamentarian – Elizabeth MacDonough – finally presented the Senate Democrats with her decision on whether the majority party can amend the “reconciliation” rules and pursue multiple “reconciliation” bills during the course of a fiscal year.  Remember, up until now, the precedent is ONLY 1 “reconciliation” bill per fiscal year. Weellll, Ms. MacDonough confirmed that the “reconciliation” rules COULD INDEED be amended so the majority party COULD pursue multiple “reconciliation” bills during the course of a fiscal year. BUT, as Ringo Starr would say, “It Don’t Come Easy” (I hope there are some Beatles fan out there :]). In short, Ms. MacDonough said that a Budget Resolution calling for multiple “reconciliation” bills during the fiscal year MUST be approved by a majority of the Senators sitting on the Senate Budget Committee BEFORE the Resolution can be brought to the Senate floor for an up-or-down vote. Same thing for the House: A majority of the House Budget Committee must approve the Resolution BEFORE the full House can take a final vote.  Think of this Committee action as a condition precedent to final approval. In addition – and this is already a part of the current “reconciliation” process itself – the full Senate MUST vote on amendments to the Resolution before final passage. During this amendment voting exercise (affectionately called “vote-a-rama”), BOTH parties force Senators to take some tough votes on particular issues that in substance have no bearing on final passage of the Budget Resolution – BUT – such votes can be used against Senators who are up for re-election during their respective campaigns. This is something that vulnerable Senators want to avoid, and it is something the respective party Leaders also want to avoid (because Leadership does NOT want to require their vulnerable Senators to take hard votes that could hurt them in their re-election efforts). In addition – and this NOT part of the current “reconciliation” process – Ms. MacDonough established a new condition, providing that multiple “reconciliation” bills should ONLY be pursued “in extraordinary circumstances and not for things that should have been or could have been foreseen and handled in a Budget Resolution” that was already approved by the majority party. In other words, unless something BAD is happening to the economy or our country’s finances/economic well-being, multiple “reconciliation” bills should NOT be used. In my opinion, this effectively means that any majority party in the Senate (be it Democrat OR Republican) CANNOT pursue multiple “reconciliation” bills as a mechanism to enact their own policy priorities in relatively stable economic times.

 

Yes, There Is More To Say Here (but you can skip to the next post if you want to)

  • Remember when I told you how I felt about eliminating the “filibuster”? In short, I said that eliminating the “filibuster” would change the Senate as an institution as we know it. And I further stated that while the Founders of our country did NOT invent the “filibuster,” our Founders structured the Senate in such a way so as to protect the minority party’s rights (if you are a glutton-for-punishment, below is my update on the “filibuster” from last year).
    • Analysis: I remind you of all of that to say this:  Ms. MacDonough did NOT talk about the Senate “filibuster.” BUT, Ms. MacDonough went so far as to say that if the “reconciliation” rules were changed so the majority party could cram as many “reconciliation” bills into 1 fiscal year as possible, such an action would amount to the “overuse and over-reliance on a hyper-fast track procedure in the ordinarily deliberative Senate.” Ms. MacDonough further stated that this “will change the culture of the institution to the detriment of the committee and amendment processes and the rights of all Senators.” Again, those are Ms. MacDonough’s words, not mine. Ms. MacDonough went on to say that the original drafters of the “reconciliation” process (back in 1974) NEVER intended for the “reconciliation” process to be used to by-pass “regular order” (note, “regular order” refers to the “normal” legislative process, involving legislative Committees considering, amending, and approving the legislation before the legislation goes to the full House or Senate floor for further amendment and ultimate passage in accordance with the “general” rules for passing legislation). I believe this is why Ms. MacDonough stated that the only times that multiple “reconciliation” bills are appropriate are in tough economic times, and NOT in generally stable economic times when the only reason multiple “reconciliation” bills are being pursued is for political expediency. Ms. MacDonough even cited legislative history to justify her point here, quoting the 1974 drafters’ statements that revising a Budget Resolution to allow multiple “reconciliation” bills should be “the exception and not the rule.”

 

So, What Does the Parliamentarian’s Ruling Mean?

  • First, it means that – in the future – any majority party in the Senate (be it Democrat OR Republican) could amend the “reconciliation” rules and pursue multiple “reconciliation” bills, BUT ONLY if the above stated conditions are met and the above described process is followed. Second, it means that for 2021 and 2022, there ain’t gonna be multiple “reconciliation” bills. Why? Interestingly, the answer is tied to fact that in 2021 and 2022, the Senate is split 50-50.
    • Analysis: In short, because the Senate is split 50-50, the legislative Committees are similarly split evenly. This includes the Senate Budget Committee, which is split 11 Democrats and 11 Republicans. Why is this important? Because – as discussed above – one of the conditions Ms. MacDonough placed on amending the “reconciliation” rules is that a majority of the Senators sitting on the Budget Committee must approve the Budget Resolution calling for multiple “reconciliation” bills. BUT, if the Committee is split 11-11, how can you get a majority? More importantly, however, the legislative Committee rules require that a certain number of Senators who are currently sitting on the Committee MUST show up in person for a vote (this is called a “quorum”). Weeellll, Republicans sitting on the Budget Committee can simply NOT show up for a vote on a Budget Resolution calling for multiple “reconciliation” bills, which means…wait for it…the Budget Resolution can NEVER be voted on. AND, if the Budget Resolution is NEVER voted on, how can you get a majority to approve the Resolution, as Ms. MacDonough requires? Answer: YOU CANNOT.

 

Soooooo, What Does All of That Mean?

  • It means that we are back to where we were at the beginning of the year – BEFORE we even had an inkling of efforts to amend the “reconciliation” rules to pursue multiple “reconciliation” bills. And back then, I explained to you that the Biden Administration and Congressional Democrats ONLY have 1 “reconciliation” bill they can enact by Sept. 30th of this year (under the 2021 fiscal year), and another “reconciliation” bill they can act on in the 4th Quarter of 2021 (under the 2022 fiscal year).
    • Analysis: AND, I further explained to you that IF the Biden Administration and Congressional Democrats burn their 2021 fiscal year “reconciliation” chit on the COVID Stimulus Package (i.e., the American Rescue Plan) – which they did – then the Administration/House and Senate ONLY have 1 more “reconciliation” bill to enact priorities like Infrastructure and Health Care Reforms. BUT, unlike earlier in the year, we now know that Infrastructure is being characterized in 2 ways: (1) Transportation Infrastructure (i.e., roads, bridges, public transportation, broadband, etc.) and (2) Human Infrastructure (i.e., 2 years of free college and pre-school, a National paid leave program, increased child tax credit, and making the enhanced ACA premium subsidies permanent). AND, we now know that the Biden Administration and Congressional Democrats want to enact EACH of these Infrastructure Plans, while they ALSO want to enact Health Care Reforms. And NOW – as discussed above – we finally know that the Biden Administration and Congressional Democrats ONLY have 1 more “reconciliation” bill to pass all 3 of these policy priorities. WHICH, consistent with the different “scenarios” I explained in my last 2 updates, means that the Biden Administration and Congressional will likely do 1 of the following:
      • Scenario #1: Throw ALL 3 of these priorities into 1 gargantuan “reconciliation” bill, to be acted upon in the 4th Quarter of this year.
      • Scenario #2: Combine the Transportation and Human Infrastructure Plans into 1 huge “reconciliation” bill, to be acted upon in the 4th Quarter of this year (and leave Health Care as a campaign issue).
      • Scenario #3: Only pursue the Transportation Infrastructure Plan (with a smattering of Human Infrastructure proposals) in a “reconciliation” bill, to be acted upon in the 4th Quarter of this year (and leave Health Care and other social policy priorities as campaign issues)

Stay tuned as the drama continues…

 

Transparency Update

Transparency and Data-Sharing With Self-Insured Health Plans

  • Okay, so you have heard me – and others – talk ad nauseam about the surprise medical billing requirements enacted at the end of last year (and oh by the way, an Interim Final Rule implementing portions of the surprise billing requirements was just sent over to OMB for final review, so we should be seeing this IFR sometime soon). What you have NOT heard many people talk about – including me – is a particular provision that was ALSO enacted in the end-of-year legislation. This little-known provision says the following:  Health care providers and other owners of provider networks CANNOT include “gag clauses” in any contract between, for example, a self-insured group health plan and the provider or network owner that prohibits the plan from accessing pricing information – as well as health claims-related data – from the provider or network owner.
    • Analysis: Specifically, this new provision of the law provides that any agreement between (1) a self-insured plan AND (2) a health care provider, network or association of providers, third-party administrators, or other service providers offering access to a network shall NOT restrict the plan from sharing:
      • Provider-specific cost information with the plan sponsor, plan participants, and referring providers through a consumer engagement tool or any other means.
      • De-identified claims and encounter information or data for each enrollee in the plan on a per claim basis. This claims-related information may include (1) financial information, such as the allowed amount, or any other claim-related financial obligations included in the provider contract, (2) provider information, including the name and clinical designation, (3) service codes, and (4) any other data element included in claim or encounter transactions. Note, a provider or owner of a provider network CAN restrict public disclosure of the pricing and the health claims-related information, meaning the provider and network owner CAN say, “Yes, by law we have to share this pricing and health claims data with the plan so the plan can share this data with the employer- or union-plan sponsor and the plan participants. BUT, this data-sharing CANNOT go any farther than that. For example, the plan or plan sponsor CANNOT post this information on a public web site.”

 

Why Is This Prohibition Against Contractual “Gag Clauses” So Important for Self-Insured Plans?

  • A medical provider that is directly contracting with a self-insured plan to provide medical services to the plan’s participants – as well as an insurance carrier that is “renting” their provider network to a self-insured plan – often times refuse to share pricing and health claims data with the plan, its employer- and union-sponsor, as well as the plan’s service providers (e.g., third-party administrators (TPAs), stop-loss carriers, data analytic firms, and others). The refusal to share this pricing and health claims data has made it difficult to keep a plan’s cost down.
    • Analysis: In addition, it has been suggested – by me and others – that the refusal to share this data will likely prevent self-insured plans from complying the health plan transparency regulations (which requires the disclosure of in-network rates on a public web site), and even the surprise medical billing requirements (because the plan will be unable to identify the median in-network rate for a particular medical item or service in a geographic area). The self-insurance industry actually asked the Federal Departments to mandate that providers and insurance carriers must share pricing and health claims data with a self-insured plan and its service providers so they can comply with the transparency rules.  However, the Federal Departments rejected this request, explaining that private-sector market forces should resolve this ongoing problem. In particular, the Federal Departments noted that a contract agreement between the self-insured health plan and the provider or insurance carrier typically includes a provision stating that any contract term that conflicts with a Federal law requirement is null and void, and the Departments opined that any contractual provision prohibiting the sharing of pricing and health claims data that prevents the plan and/or its service providers from complying with the health plan transparency requirements (which again, requires the disclosure of in-network rates on a public web site) would conflict with Federal law, and thus, this contractual provision would be rendered null and void. I am NOT saying that I disagree with the Federal Departments’ opinion here – BUT – this legal theory has yet to be proven in practice.  In the meantime, however, Congress decided to step in to address this historical problem of “data-hoarding” by prohibiting “gag clauses” in contracts that have been used to keep pricing and claims data a secret. In my opinion, this new provision of the law is the key to enabling self-insured plans and their employer- and union-sponsors to comply the health plan transparency regulations, as well as the new surprise billing requirements. HOWEVER, self-insured group health plans and their employer- and union-plan sponsors MUST re-negotiate their contracts with providers and the owner of provider networks (e.g., insurance carriers) first. I will be curious to see how smooth those negotiations go in practice, but the law is the law, so I can’t see how providers and carriers can push-back on this.

 

3 Additional Points on This Data-Sharing Issue

  • The first point relates to insurance carriers selling fully-insured “group health plans” as well “individual” market plans. The second point relates to information about “quality of care” (i.e., “quality of care information”). And the third point relates to entities providing services to self-insured plans (e.g., TPAs, stop-loss carriers, data analytic firms, etc.).
    • Insurance Carriers: This new prohibition against contractual “gag clauses” is NOT limited to self-insured plans.  Insurance carriers selling fully-insured “group health plans” as well “individual” market plans MUST also be able to access medical pricing data from medical providers and other entities that manage or own the provider network utilized by the insurance carrier for their plans. To my knowledge, this “data-hoarding” issue is not so much of a problem for fully-insured “group” and “individual” market plans (relative to the issues faced by self-insured plans, as discussed above). BUT, it makes sense that insurance carriers – just like plan sponsors of a self-insured plan – should be allowed by law to access pricing and claims data.
      Quality of Care Information: In addition to medical pricing and health claims data, providers and owners of networks must also share “quality of care information” with self-insured plans and insurance carriers selling fully-insured “group” and “individual” market plans. There’s one problem here: The statute does NOT define what “type” of quality of care information must be shared with the plan or the carrier. The Federal Departments will have to come up with a definition of “quality of care information” when they start implementing this requirement (which by the way was effective on the date of enactment, and thus, is effectively the law right now).
      Self-Insured Plan Service Providers: Speaking of implementation – and with respect to my third point – questions have been raised as to whether self-insured plans can share the pricing, health claims, and quality of care information with the plans’ service providers. On the one hand, the statute indicates that the ONLY entities/individuals a self-insured plan can share this data with are (1) the plan sponsor, (1) plan participants, (3) referring providers, and (4) a HIPAA-defined business associate. Based on a strict reading of the statute, if a plan service provider is NOT a HIPAA-defined business associate (and many service providers are NOT), it would appear that a provider or owner of a provider network could prohibit the plan – through contract – from sharing this data with non-business associate service providers. HOWEVER, the statute could reasonably be read broadly such that the term “plan sponsor” could also include “service providers of the plan sponsor.” In this case, a service provider (e.g., a TPA, stop-loss carrier, data analytics firm, or even a health IT company building a transparency tool) would NOT be restricted from accessing pricing, claims, and quality care data in the event the self-insured plan – and its employer- or union-plan sponsor – chooses to share this information with the plan’s service providers. In my opinion, the Federal Departments need to issue guidance clarifying that a self-insured plan sponsor CANNOT be restricted from sharing the pricing, claims, and quality of care data with the plan’s service providers. It is important to emphasize that these service providers are an extension of the plan sponsor, and these service providers are an integral part of the overall management of the self-insured plan’s operations. In addition, an employer- or union-plan sponsor has a fiduciary duty under ERISA to act in the best interest of the plan participants and defray costs to the plan. By partnering with various service providers, these employer- and union-plan sponsors are acting in the best interest of the plan participants to ensure smooth operation of the plan, as well as ensuring the plan’s long-term solvency. The inability to share pricing, claims, and quality of care data with service providers frustrates these plan sponsors’ ability to satisfy their fiduciary duty to act in the best interest of the plan participants. Also, the primary purpose for sharing pricing, claims, and quality of care data with a plan sponsor’s service providers is to help defray costs to the plan, and if a plan sponsor is restricted from sharing this information with a service provider, the plan sponsor will fail to satisfy this fiduciary duty as well.