Since we last checked in with you friends, we both (barely) survived Election week. Then, even before we could catch our breath, the Supreme Court of the United States heard oral arguments in the latest case challenging the Affordable Care Act (ACA). During the questioning period, the two Republican-appointed Justices most likely to uphold the rules, John Roberts and Brett Kavanaugh, acted just like we predicted they would. COVID-19 case numbers have topped 100,000 every day, yet Congress still hasn't passed another economic relief package. Still, with all of that going on, our favorite thing to talk about remains the new healthcare price transparency rules.
We’re pretty sure that they will be, in the long run, as big or a bigger deal than the ACA (we acknowledge they come from the ACA—but stick with us here—we are just making a point relative to scale). And while we try never to speculate what is going on in Donald Trump’s mind, we are quite surprised he did not release them earlier or call more attention to them. Everyone’s been waiting for a GOP health care plan for years, and the President may have just delivered. These price transparency rules: (1)will up-end almost every type of contract out there in the health insurance industry, (2) will release a treasure trove of data into the marketplace, and (3) will take an enormous amount of effort and money to implement. Love them, hate them, or somewhere in between, you'd be hard-pressed to say they aren't bold and disruptive, and they are coming at the employee benefits industry fast!
Maybe it’s just 2020 fatigue, but we’re shocked that, so far, the reaction to these three health plan transparency regulations hasn't been more substantial. They might be a bit of a sleeper because people assume that a Biden Administration will undo late Trump Administration rules. Congress always has 60 legislative days to vote to disapprove of regulation, and if that clock isn’t up before the end of the legislative session (and it won’t be in this case), the 60 days start again with the new Congress. A simple majority of both chambers could vote to overturn the transparency rules, and a President Biden could sign the legislation. We don't think that is going to happen, though. As we've said before, price transparency is like the brownies of the health policy world—very few can resist it, let alone object. No matter who ultimately controls the next Senate, it's hard to imagine them using the Congressional Review Act to eliminate these regulations.
A Biden Administration could also act to modify the rules through the typical regulatory process. That would involve the new Administration proposing modifications, including a legal justification for doing so. They would then need to allow for a public comment period, review all comments, and issue final new rules. That process typically takes months, if not a year or more, and the first significant price transparency deadline is only about 13 months away. An enforcement delay is also possible, perhaps if the new Administration cannot deliver the technical disclosure specifications to health plan sponsors in time. (Jen, for one, having lived through the employer mandate implementation, has her money on such an administrative extension.)
These rules, like many other healthcare regulations, could also be challenged in federal court. However, challengers will be hard-pressed to argue that the Trump Administration exceeded its statutory authority or acted arbitrarily or capriciously with these measures. The preamble includes a lengthy section outlining why they are both legally justified and constitutional. They also divided the final regulations into three separate rules with explicit severability clauses. A federal judge could strike down just a portion if necessary, and the remainder will still stand. Since the legal authority for the health price transparency regulations stems from the ACA, perhaps the most pressing threat to the measure comes from SCOTUS’ consideration of Texas v. California. But we already told you weeks ago why we think it is HIGHLY unlikely that SCOTUS will unravel the whole health reform law.
What does this mean for all who will be affected by the new regulations—employer plan sponsors, health plans, brokers, third-party administrators, pharmacy benefit managers, and more? In our view, it means get busy. All health plan contracts and services agreements that extend past December 31, 2021, will need to reflect the new rules. That means not only including appropriate provisions in new contracts but also revisiting existing agreements. By January 1, 2022, all health plans and employer plan sponsors must ensure the disclosure of all 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. Then, deadlines to make sure that all plan participants can access detailed personalized cost estimates for covered treatments, providers, and services before they incur a claim through an internet website or in paper form kick in on January 1, 2023, and January 1, 2024.
We have quite a few thoughts about what employers, particularly those that self-fund their benefit plans, brokers that serve this market, and independent TPAs and PBMs, need to do about compliance. The road ahead is going to be complicated, but opportunity also abounds. If you’d like to talk with us about it, please send us a message, leave a comment, or give us a call!