It's Election Day, so of course, we can talk of nothing else between the two of us. Just like most of the United States, we wonder if we’ll know the outcome of the Presidential race tonight. Also, how lonely will we feel once candidates and their relatives are no longer texting and emailing us all of the time?
Since you are our friend and reading this blog, we will assume that you've either voted or have a plan to vote. We're also not going to presume that anything we say might influence your thoughts about a particular candidate. However, given the day's significance, we do want to discuss what we think about before exercising our sacred right to vote.
Personally, we consider our votes to be chess moves, not valentines. We weigh each candidate’s ideas about health policy when casting a ballot, among many other things. Another critical factor we contemplate is what power a candidate would have to influence said policy and how they might use it. For example, we always think it's funny when we see a state legislative candidate commenting on changes they would like to make to federal law. Similarly, we never panic when we hear presidential candidates propose sweeping changes to federal laws. It’s simply not within a President’s unilateral power to overturn the Affordable Care Act or create a single-payer health care system, no matter how much a candidate talks about it on the campaign trail. We are much more interested in what Congressional candidates have to say about those topics, and even then, we keep in mind that each Member of Congress has only one vote. Oh, and that for the last decade or so, Congress hasn’t been incredibly efficient.
Presidents have many other powers, like appointing judges, setting foreign policy, and crafting federal regulations. That last power is the one we focus on because it has the most ability to affect our lives at work. While a chief executive cannot create a new law independently, most existing statutes give the executive branch great authority to implement the details via regulation. We think of it this way—if a law is a house, Congress creates the walls and the roof. Rules are all the details and furnishings in each room, and Congress generally gives the President has the power to redecorate and sometimes even remodel ad nauseum. Occasionally, the Executive branch gets too crazy with its renovations and exceeds the scope of its statutory authority. That’s when someone takes the Administration to federal court and claims that new curtains would be one thing, but replacing all of the windows is another. If the courts agree, they may overturn all or parts of a rule.
A great example of executive power via regulation is the Trump Administration’s action last week regarding healthcare price transparency. President Trump wanted to increase consumerism and hopefully reduce medical spending, but Congress wasn’t passing any laws to that effect. So, he issued an Executive Order urging his Administration to develop regulations to create greater healthcare price transparency for consumers. The Administration found what it believes to be sufficient authority under the Affordable Care Act, and first came a price disclosure regulation aimed at hospitals. Then came the final rules released on October 30, 2020, creating new transparency requirements for health insurance issuers and group health plan sponsors.
The new rules require almost all non-grandfathered health insurance plans and employers that sponsor group coverage to provide plan participants with detailed and personalized price information before a claim occurs.
Some important things we noticed about it:
- Health insurance issuers and group health plan sponsors (referred to here as “plans”) have to ensure that all plan participants have access to critical advance pricing information. This requirement should help drive prices down eventually. However, plans have a relatively short amount of time to build complex systems to support information requests.
- By January 1, 2022, plans must publicly disclose in-network provider negotiated rates, historical out-of-network allowed amounts, and drug pricing information through three machine-readable files posted on an internet website.
- Beginning with plan or policy years starting on or after January 1, 2023, plans have to ensure that plan participants can access detailed personalized cost estimates for 500 designated shoppable services before they incur a claim. All information must be made available on an internet website or if requested, in paper form.
- By plan or policy years beginning on or after January 1, 2024, all information must be available via an Internet tool and on paper, if requested, for every covered item and service.
- We don’t know any employer plan sponsor who can access all of the information they must make available for disclosure before a claim is incurred. (So we anticipate things are about to get messy…) The information employer group plan sponsors must make available to plan participants includes:
- Estimated cost-sharing liability for the participant’s specific procedures and conditions;
- The amount of cost-sharing liability a participant has incurred to date relative to their maximum out-of-pocket limit and any deductible;
- The negotiated rate the carrier or group plan has agreed to pay an in-network provider for the specific covered service the plan participant is considering;
- The maximum reimbursement amount that the carrier or group plan would pay to an out-of-network provider for a particular service;
- An explanation of any prerequisite for the person's specific coverage request, such as step therapy or a preauthorization; and
- A notice warning about balance-billing to explain that the plan is merely providing personalized estimates and actual costs may vary.
- The rule allows employers with fully-insured group coverage to transfer full liability to their health insurance issuer as part of their coverage contract. However, because the underlying law doesn’t allow it, there is no such liability shield for self-funded or level-funded plans. (So we anticipate things are about to get REALLY messy…) Businesses that offer self-insured major medical coverage will undoubtedly contract with their third-party administrator or another vendor to fulfill their transparency obligations. These employer groups can also ask their vendors for indemnification. But in the end, due to the limitations of regulation versus legislation, any employer that self-funds their plan is stuck with ultimate liability for something they cannot fully control.
- Even though the Administration acknowledges in the rule that people don't just want to compare prices—they want quality data too—the measure does not require the disclosure of any provider quality information because of regulatory process limitation. Since the Trump Administration did not propose the inclusion of quality data in the new transparency tools (perhaps because they did not think they had the authority to require its disclosure), the final rule does not require it. The Administration did request information about the potential disclosure of quality data at a later date from stakeholders, but there’s no guarantee that this will ever be mandated. Even if the Trump Administration, or another Administration in the future, requires more transparency in provider quality metrics, it does not mean that it will be through this regulation's new transparency system.
- The Trump Administration might be a little bit worried that someone will challenge this regulation in federal court. The preamble to the document includes a large section where the Departments issuing the rule explain their legal authority for creating the regulation (which is atypical). The final regulations are also divided into three separate “rules” with explicit severability clauses. That allows a federal judge to strike down a portion of the transparency measure, if needed, and not nix the whole thing.
- We will need an extra blog post or two (or more…) to talk about what employers, especially self-funded employers, and third-party administrators, especially independent third-party administrators, need to do about compliance. The tasks ahead are significant, and if you can’t wait for our analysis or think you need some immediate help, please send us a message or give us a call!
Finally, as you can see, there is tremendous power in the federal regulatory system. It is not the type of power discussed at rallies, on social media, or in campaign commercials. Bottom line, when we cast our ballots (well, Jen already cast hers; Jessica is masking up and voting in person today), we think about the power each office holds. Then we consider what each candidate might do with that power and how it reflects our values and vote accordingly. We hope you will too, and no matter what changes this Election Day does or does not bring, you better believe we will be back soon to chat with you about it.
