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Is Congress Already Phoning It In? MZQ’s Thoughts On CAA23

January 17, 2023

Friends, we must admit that we are annoyed these days, and the subject of our ire is the United States Congress. Yes, of course, we were worked up about the “it takes 15 tries to elect the Speaker because seemingly adult males thought it was a good idea to negotiate with toddlers” incident. However, that historic event was just a symptom of the greater problem—most Members of Congress seem to be incapable of/disinterested in performing their main job (legislating). 

These days, they wait until their backs are up against the wall, like when the federal government is about to run out of money. Then, like a teenager rushing to clean a messy room by shoving detritus into a closet, they cram hundreds of policy provisions into one giant law, often forgetting items and using sloppy wording in the process. The latest omnibus spending bill, and how it does (and does not) impact health policy and employee benefits, is the most recent example of this infuriating behavior. 

On December 29, 2022, President Biden signed the Consolidated Appropriations Act, 2023 into law. Just the fact that we now need to abbreviate this law as CAA23, to distinguish it from previous CAAs, is annoying. On the other hand, while not quite as long or packed quite as heavily with health policy as the Consolidated Appropriations Act, 2021, it does include some provisions relevant to the sponsors of group health and welfare plans in its 1,653 pages. These include relief on telehealth coverage offered through qualified High Deductible Health Plans (HDHPs) that pair with Health Savings Accounts (HSAs), increased funding for mental health and substance use disorder parity enforcement, and some Medicare and Medicaid changes that could have an impact on private health insurance coverage too.

The telehealth relief in the CAA23 is welcome, but the legislative language used is quirky and less helpful to group health plans than it could be, likely due to lack of time to proofread.  The law extends a protection that originated with the Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) which allowed people who have coverage through a HDHP to be able to receive telehealth care on a first-dollar basis without having to meet their deductible first, while still being able to legally contribute to an HSA. This protection expired on December 31, 2022. The CAA23 creates another safe harbor for first-dollar telehealth coverage offered through an HDHP for plan years beginning after December 31, 2022, through December 31, 2024.

However, the way this section of the law is written creates a gap in relief for non-calendar year plans. It only applies to plans that start after December 31, 2022, but the old relief expired on that date. Congress was trying to do a good thing here, but in its rush to act, it seemingly forgot that more than half of employer group plans do not start on January 1. Let’s use the real-life example of the MZQ Consulting Employee Benefit Plan to explain how this relief is better for some Americans than others.  

The first day of the MZQ Plan year is September 1. The most popular coverage option in the MZQ Plan is a HDHP that pairs with an HSA. In 2022, this plan included first-dollar coverage of telehealth visits. On December 31, 2022, this benefit expired, so MZQ employees and their dependents now need to pay “fair market value” for telehealth visits between January 1 and August 31, 2023, until they meet their health plan deductible. Otherwise, they cannot legally contribute to their HSAs. First-dollar coverage of telehealth can resume on September 1, 2023, and continue throughout the 2023 Plan year, but it will expire (unless Congress decides to do more work) midway through the 2024 Plan year on December 31, 2024. Now, if the MZQ Plan had a January 1 start, the relief would have lasted for two whole years and there would be no gap. 

Other points about the change worth noting are that group plan sponsors do not have to offer their plan participants access to telehealth coverage at all, nor do they have to offer it on a first-dollar basis for any type of plan offering, including HDHPs. This relief is optional for plan sponsors. If a group plan decides to adopt it, they also need to make sure their plan documents reflect that their definition of care that can be accessed pre-deductible for purposes of HDHPs reflects this latest relief offered by the CAA23.

Concerning mental health care, the CAA23 appropriates $10 million for state grants to help state regulators review and enforce Mental Health Parity and Addiction Equity Act (MHPAEA) compliance in fully insured health plans. It also eliminates the ability of certain state and local governmental plans to opt out of MHPAEA compliance and calls for a GAO Report on the extent of Medicare’s coverage of benefits for mental health/substance use disorders and medical/surgical conditions. Notably, the legislation did not increase MHPAEA fines or enhance federal MHPAEA enforcement authority, which was under discussion. However, bipartisan interest in making these changes to enhance MHPAEA enforcement persists and may be included the next time Congress decides to actually pass a substantive law. So, be on the lookout in March, when it comes time to lift the debt-ceiling.

On the Medicare front, the legislation increases Medicare provider reimbursement rates to mitigate cuts that were set to become effective January 1, 2023. Providers had faced cuts of roughly 4.5%, which will now be reduced to 2% in 2023 and 3.25% in 2024. This change will have an indirect impact on all private health insurance policies, since so many private reimbursement arrangements are tied to a percentage of Medicare reimbursement rates. The CAA23 also extends flexibility for Medicare telehealth visit reimbursement, including eliminating participant geographic restrictions and initial in-person visit requirements and allowing more Medicare providers to offer telehealth services through December 31, 2024.  

What do you think, friends? Do you wish for the days of yore, when Congress actually thoughtfully debated and passed legislation on the regular? Or, are we just getting cranky as we pass through our 40s? Let us know in the comments, or you can always find us via email, phone, or bat signal!