Legislative & Regulatory Updates Relating to the Health Care Industry, July 20, 2020
Study Finds Individual Market Profitable in Q1– A new analysis released by the Kaiser Family Foundation finds that insurers in the individual market remained profitable in the first three months of 2020 despite the onset of the COVID-19 pandemic. Data suggests that the individual market had not yet been severely impacted by the COVID-19 pandemic or the economic crisis as of March, but there are reasons to suspect more significant changes will be reflected in the second and third quarters. CMS recently reported that since the end of the open enrollment period in December, 487,000 consumers have enrolled in plans through HealthCare.gov after qualifying for a Special Enrollment Period following the loss of other qualifying health coverage. An estimate from consulting firm Avalere found that enrollment on the insurance exchanges could balloon by more than 1 million people as laid-off workers look for new insurance options. A decrease in health care utilization has also contributed to record profits for some insurers. This week, UnitedHealth Group announced that they registered more than $6.6 billion in profits in the second quarter. UnitedHealth’s MLR in the quarter was 70.2% compared with 83.1% during the same time last year. Across the country, elective surgeries paused for months this spring as hospitals and other health-care providers braced for surges of coronavirus patients. Many Americans also steered clear of clinics and emergency rooms, fearing infection. UnitedHealth said that the use of health-care services began returning to near-normal levels in June, a shift that continued into July. The company said it expected higher health-care costs in the second half of the year, as people seek deferred care.
Analysis Finds 10 Million Could Lose Employer Sponsored Coverage – According to a recent analysis from the Urban Institute and the Robert Wood Johnson Foundation, more than 10 million people could lose employer-sponsored health insurance as a result of pandemic-related job loss in their household between April and December 2020. In spite of some recent employment gains in June, the U.S. unemployment rate has been hovering around 11%, according to the Bureau of Labor Statistics. For comparison, this February, the U.S. unemployment rate was at 3.5%. Using projections data on employment losses by industry, state, and demographic characteristics, researchers estimated that 48 million nonelderly people in the United States will be part of a household in which someone loses a job due to COVID-19. The non-profit health care advocacy organization, Families USA published their own estimate that 5.4 million Americans have lost coverage amid the pandemic between February and May. According to the Families USA study, these recent increases in the number of uninsured adults are 39% higher than any annual increase ever recorded. The highest previous increase took place over the one-year period from 2008 to 2009, when 3.9 million nonelderly adults became uninsured.
Supreme Court Unlikely to Hear Challenge to ACA Before November Election – According to a new schedule released by the Supreme Court this week, the Court will not hear a case challenging the ACA in October when their next term begins. This makes it highly unlikely that the Court will hear the case before the Presidential election, avoiding a high-stakes showdown over a lawsuit that will factor prominently into this fall’s campaigns. The case centers on whether the ACA should be struck down or if it is “severable” from the individual mandate that requires people to buy health insurance. A 2017 tax reform law zeroed out the mandate’s penalty, but it remains a part of the law. An appeals court ruled in December that the individual mandate was unconstitutional, but it punted on a decision over whether the law can exist without the mandate. A lower federal court ruled that the entire law should be struck down. The Trump administration and a coalition of states supporting the lawsuit had previously discouraged the Supreme Court from taking up the case this year.
Clarification of Coverage of COVID-19 Testing Without Cost Sharing – The Departments of Health and Human Services (HHS), Labor, and Treasury issued additional subregulatory guidance, via frequently asked questions (FAQs), clarifying that the elimination of COVID-19 test cost sharing only applies to tests that are “medically appropriate for the individual, as determined by the individual’s attending health care provider.” The FAQs clarify that a provider must make an individualized determination of medical appropriateness for each patient in order for cost sharing to be waived, and that issuers are not required to waive cost sharing for COVID-19 testing conducted for general surveillance or employment/return-to-work purposes. The FAQs also clarify that self-insured group health plans are subject to the cost sharing waiver requirement. More from Axios, NPR.
Administration Signals Intent to Extend COVID-19 Public Health Emergency – On a private call with governors this week, Vice President Pence and HHS Secretary Azar said the COVID-19 public health emergency will likely be extended for an additional 90 days beyond the current July 25 expiration. The decision, which is not final, rests with the White House. This would extend through the end of October the federal requirement that group health plans and health insurance issuers in the individual or group market, among others, cover COVID-19 testing and ancillary items and services without cost sharing. More from Politico.
Department of Labor Proposes Mental Health and Substance Use Disorder Parity Self-Compliance Tool – The Department of Labor’s Employee Benefits Security Administration (EBSA) released a proposed Self-Compliance Tool to help covered entities, including group plans and insurance issuers, determine compliance with the Mental Health Parity and Addiction Equity Act and related requirements under the Employee Retirement Income Security Act. EBSA requests comments on the tool by July 24, 2020. Press release.
House Passes ACA Improvement Legislation – On June 30, 2020, the House of Representatives voted to approve legislation to reform the ACA. The bill serves as a messaging vehicle for Democrats heading into November’s elections. Senate Majority Leader Mitch McConnell (R-KY) does not intend to bring to the floor and the Trump administration issued a veto threat. Among other provisions, the bill would increase advance premium tax credits (APTCs) in order to cap premium payments at 8.5% of income, increase eligibility for APTCs to individuals and families making more than 400 percent of the Federal Poverty Level, and create a $10 billion per year fund to pay reinsurance costs or lower beneficiaries’ out-of-pocket costs. Finally, the bill would rescind the Trump administration regulation that expanded the availability of short-term, limited duration insurance. A recent report from the House Energy and Commerce Committee found that enrollment in short-term, limited duration plans rose 27% in 2019, to about 3 million enrollees. More from The Hill.
Supreme Court Upholds Contraceptive Coverage Opt Out – On Wednesday, July 8, 2020, the Supreme Court ruled to uphold the Trump administration’s 2018 expansion of the types of organizations that may opt out of the ACA’s requirement to provide cost-free birth control. With the ruling, essentially all nongovernmental employers will be able to opt out of the requirement. The “accommodation” created by the Obama administration, which allows employees to receive the coverage but avoids having the objecting organization cover the cost, is still available, but individual employers may decide whether or not to use it. More from Washington Post, NPR, CNN.
Judge Upholds Hospital Price Transparency Rule – A federal judge upheld Trump administration rules requiring hospitals to disclose publicly prices negotiated with insurers. Both hospitals and insurers opposed the rule, and the American Hospital Association sued to block the rules from taking effect in January 2021, arguing they exceed the administration’s legal authority and infringe hospitals’ First Amendment rights. The court rejected both arguments. The American Hospital Association will appeal the ruling to the D.C. Circuit Court of Appeals and request an expedited review.
HHS is working on a final rule related to transparency in coverage (0938-AU04) which aims to facilitate access to information about health care costs for patients before they receive care.
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