On July 17th, the California Office of Administrative Law (“OAL”) approved an emergency regulation (effective until January 14, 2021) from the California Department of Managed Health Care (“DMHC”) that specifies COVID-19 diagnostic testing coverage requirements for California health care service plans. Medi-Cal managed care plans, Medicare Advantage plans, and specialized health plans are not subject to the regulation. The DMHC provided additional context to the emergency regulation in an all plan letter issued on July 23rd.

The regulation deems COVID-19 testing to be an urgent health care service during the California state of emergency. It also states that COVID-19 diagnostic testing is a medically necessary basic health care service for enrollees who are essential workers, regardless of whether the enrollee has symptoms of COVID-19 or a known or suspected exposure to a person with COVID-19. Essential workers are defined in the regulation to include a broad range of individuals working in the health care, emergency services, public transportation, congregate care, correctional, food service, and education sectors. Additionally, they include individuals who work in retail, manufacturing, agriculture, and food manufacturing that either have frequent interactions with the public or cannot regularly maintain at least six feet of space from other workers.

Between the regulation, all plan letter, and other applicable federal law, California health plans will need to comply with the following requirements for enrollees seeking COVID-19 testing:


Continue Reading Required Coverage of COVID-19 Testing for Essential Workers in California

Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this episode, hosts Payal Nanavati and Joe Records sit down with Xavier Baker and Kevin Kroeker to discuss medical loss ratio requirements. The first episode

The past week has seen daily action at the state and federal level that seeks to ensure that health plans and insurers are providing unrestricted access to testing for COVID-19 and for related services.  Health plans nationally have responded by adopting copayment and preauthorization waivers even where they have not been mandated.

Here are a few of the headlines:

On March 2, 2020, New York Gov. Andrew Cuomo announced he would require state health insurers to waive fees related to coronavirus testing in the state in order to avoid cost as a barrier to testing.  To implement his directive, Governor Cuomo announced that the New York State Department of Financial Services (“DFS”) will promulgate an emergency regulation that (i) prohibits health insurers from imposing cost-sharing on an in-network provider office visit or urgent care center when the purpose of the visit is to be tested for COVID-19 and (ii) prohibits health insurers from imposing cost-sharing on an emergency room visit when the purpose of the visit is to be tested for COVID-19.  In addition, DFS issued other COVID-19 guidance to New York insurers, including: (a) directing insurers to develop robust telehealth programs with their participating providers, and (b) directing insurers to verify that their provider networks are adequately prepared to handle a potential increase in the need for health care services, including offering access to out-of-network services where appropriate and required.
Continue Reading Flurry of Regulatory Activity Driven by COVID-19 Anxiety Impacts Health Plan Requirements and Permissible Actions

In early February, two federal bills targeting surprise billing in healthcare advanced out of committee.  On February 11, the House Education and Labor Committee passed the Ban Surprise Billing Act (H.R. 5800), which was introduced by Chairman Rep. Bobby Scott (D. – Virginia) and Ranking Member Rep. Virginia Foxx (R. – North Carolina).  One day later, the House Ways and Means Committee unanimously advanced the Consumer Protections Against Surprise Medical Bills Act (H.R. 5826), led by Chairman Rep. Richard Neal (D. – Massachusetts) and Ranking Member Rep. Kevin Brady (R. – Texas).  Both bills would prohibit providers from balance billing patients for surprise medical bills and would limit patients’ cost-sharing to in-network amounts.  The two competing bills must be reconciled before the full House can vote on the issue.  Leaders hope to include the final product in a spending bill that must pass Congress by May 22.

Similar scopes of coverage

The competing bills are substantively similar in several ways.  Each bill applies to out-of-network emergency claims, to post-stabilization inpatient services provided to patients who are admitted to the hospital through the emergency room, and to non-emergency services provided at in-network facilities by out-of-network providers.  The Ban Surprise Billing Act also covers air ambulance services.  Additionally, both bills apply to all individual and group health plans (both fully- and self-insured) in the group and individual markets, but do not apply to federal programs such as Medicaid or the Federal Employees Health Benefits Program.  The Ban Surprise Billing Act also extends to grandfathered health plans.

Notice requirements
Continue Reading Competing Surprise Billing Proposals Set to Collide in the U.S. House; States Test Different Solutions

Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this episode, hosts Payal Nanavati and Joe Records sit down with Xavier Baker and Kevin Kroeker to discuss medical loss ratio. This episode touches on

CMS approved requests from five additional states to launch reinsurance programs under Section 1332 state innovation waivers in order to help alleviate high premiums in the individual health insurance markets. Colorado, Delaware, Montana, North Dakota, and Rhode Island are embracing reinsurance as a way to help insurers cover the cost of the largest claims they face. They join Alaska, Maine, Maryland, Minnesota, New Jersey, Oregon, and Wisconsin, which have existing reinsurance programs. The positive results in these seven states are significant: a 17% drop in premiums on average in the first year of operation.

Reinsurance was a key feature of the ACA to help stabilize premiums in the individual market for 2014 – 2016, the first three years of the marketplaces. The marketplaces were new, and insurers faced much uncertainty in covering previously uninsured and under insured individuals. The ACA offered a partial safeguard against high, unpredictable medical expenses under Section 1341’s transitional reinsurance program. Estimates place the average reduction in premiums by the federal reinsurance program by as much as 14%. Based on the assumption that insurers would gain a better understanding of their members’ health status as time passed (and thus could price their products with greater accuracy), the ACA’s reinsurance program was temporary. But in 2017 premiums increased more sharply than they had in previous years, in part due to the loss of reinsurance.


Continue Reading Increased State Innovation Aimed at Stabilizing ACA Marketplaces

In a victory for the Trump Administration, on July 18, 2019, the United States District Court for the District of Columbia upheld a 2018 regulation designed to expand the sale of short-term, limited duration insurance policies and rejected claims that the regulation unlawfully undermined the Affordable Care Act (“ACA”) and would destabilize the ACA marketplaces. Plaintiffs have indicated that they will appeal the decision.

Short-term, limited duration insurance policies are not required to comply with ACA protections, including those relating to essential health benefits like maternity care and prescription drugs. Originally designed to fill very short gaps in coverage, these types of plans were not included in the definition of individual health insurance under the ACA. These short term policies can be designed with high out-of-pocket maximums, low coverage caps, and significant benefit gaps. They can also deny coverage to those with pre-existing conditions. For these reasons, these policies can be marketed at a lower cost. Plaintiffs representing insurers, providers, and consumer groups sued the administration arguing that the availability of short term plans would draw away younger and healthier individuals from risk pools and put insurers at an unfair disadvantage by forcing them to compete with short term plans that would not be required to comply with the same ACA protections.


Continue Reading Court Upholds Short-Term, Limited Duration Insurance Policy Rule

On October 15, 2018, the Centers for Medicare & Medicare Services (“CMS”) in the Department for Health and Human Services proposed a rule to require prescription drug manufacturers to post the Wholesale Acquisition Cost (“WAC”) for drugs and biological products covered by Medicare or Medicaid in direct-to-consumer television advertisements. The WAC reflects the manufacturer’s list price for a drug to direct purchasers, not inclusive of any discounts or rebates. CMS is proposing this rule in the context of broadcast advertisements, an area in which the Supreme Court has recognized that the government may take special steps to help ensure that viewers receive appropriate information.[1]

CMS stated that 47 percent of Americans have high-deductible health plans and that many patients may pay the list price of the drug until they meet their deductible. The proposed rule aims to provide greater transparency into the prices charged by prescription drug manufacturers. The theory is that markets operate more efficiently with greater transparency, and that increased exposure of the list price will also provide a moderating force to discourage price increases. While wholesale prices do not equate to the patient’s out-of-pocket obligation, CMS asserts that benefit designs are impacted by WACs, and patients in high-deductible plans may pay the full list price until meeting their deductible – thus, the WAC may still be relevant to many patient and impact their decisions and market dynamics. The price required to be posted would be for a typical course of treatment for an acute medication like an antibiotic, or a thirty day supply of medication for a chronic condition that is taken every month. The posting would take the form of a legible textual statement at the end of the ad and would not apply where the list price for a thirty day supply or typical course of treatment of a prescription drug was less than $35.
Continue Reading CMS PROPOSES RULE TO REQUIRE PRESCRIPTION DRUG MANUFACTURERS TO DISCLOSE DRUG PRICES IN TV ADS

Iowa has enacted legislation to permit the offering of certain health benefit plans that would not be subject to the restrictions of the Affordable Care Act (ACA).

The bill combined two separate measures, each intended to expand access to association health plans (AHPs) that are exempt from many of the ACA’s protections. First, the new law would allow small employers to band together to form associations that would be eligible to offer members’ employees coverage as if they were a single large employer group, which would be subject to less burdensome regulation under the ACA. Second, a health benefit plan sponsored by a nonprofit agricultural organization domiciled in Iowa (the Iowa Farm Bureau Federation) and covered by a third-party administrator that has administered the organization’s health benefits plan for more than 10 years (Wellmark Blue Cross & Blue Shield) is exempt from the definition of insurance that is subject to regulation by the state insurance department.

Recently, AHPs have been touted by opponents of the ACA as a tool to avoid its effects for larger covered populations. Iowa’s measure follows an executive order by President Trump last fall directing the administration to, among other things, promote the use of AHPs. In response to that order, the Department of Labor proposed a rule that would expand the definition of AHP to allow employers greater access to AHP coverage. As we noted in a previous post, several states have pressed the idea through comments to that proposed rule that expanded access to AHPs would create opportunities for employers to offer more affordable coverage.

The impact of Iowa’s enactment remains to be seen. Critics of the measure have expressed concern that it will water down consumer protections by exempting coverage from ACA requirements that plans cover essential health benefits, such as maternity and mental health care. Although plans could continue to include such benefits, they would not be legally obligated to do so, and could cut costs by eliminating coverage for broad categories of health care.
Continue Reading Iowa Enacts Legislation to Broaden Access to Association Health Plans

On March 8, the White House encouraged Congress to pass stabilization legislation that would not authorize the reimbursement of cost-sharing reductions (CSRs) made by health plans in 2017, as reported by Modern Healthcare. This move comes almost five months after the Trump Administration’s announcement in October that it would discontinue CSR payments effective immediately. The legislation, if passed, would preclude the government from paying CSRs for the 2017 year and would allow CMS to claw back surplus money that plans have received from the federal government and applied towards CSRs.
Continue Reading White House Proposes Language to Congress Eliminating CSR Reimbursement for 2017