June 25, 2019

Executive Order on Health Care Prescribes Change Ahead for Providers and Insurers

Yesterday, President Trump signed an Executive Order (EO) aimed at improving health care price and quality transparency. While it requires few immediate changes, it foreshadows future requirements for health care providers and health insurers. The EO builds upon myriad recent — and not so recent — efforts by Congress and the Executive Branch to bring more value to our health care system through initiatives across the Department of Health and Human Services (HHS), the Department of Veterans Affairs (VA) and other departments.

Despite a months-long buildup to this price transparency announcement, the administration has left the details and implementation to the agencies and does not mandate final, binding actions. Rather, the EO requires agencies to propose regulations and develop reports and guidance. The EO first requires HHS to issue a proposed rule by the end of August to require hospitals to publicly post standard charge information. The rule will be our first opportunity to see how expansive a view HHS will take in interpreting and implementing the EO, particularly with respect to negotiated rates set by providers and insurers. HHS Secretary Alex Azar certainly has high hopes, declaring that the EO “will go down as one of the most significant steps in the long history of American health care reform.” In the meantime, hospitals and insurers are already pushing back, claiming that a requirement to disclose negotiated rates could reduce competition and increase prices.

Below is a list of the EO requirements and the prior administrative action or authority that lays the foundation for the actions.

 

  Executive Order Charge Potential Authority and/or Prior Administration Action Timing
Price Transparency – Hospital Standard Charges (Sec. 3(a)) HHS shall issue a proposed regulation to require hospitals to publicly post standard charge information, including charges and information based on negotiated rates and for common or shoppable items or services, in machine-readable format. HHS should address monitoring and enforcement mechanisms. Per section 2718(e) of the Public Health Service (PHS) Act, which was enacted as part of the Affordable Care Act, effective January 2019, hospitals have been required to establish, update and make public a list of the hospital’s standard charges for items and services provided by the hospital. By August 23, 2019
Price Transparency – Consumer Out-of-Pocket Costs (Sec. 3(b)) HHS, Labor and Treasury shall issue an advance notice of proposed rulemaking proposing to require providers, insurers and self-insured group health plans to provide or facilitate access to patient out-of-pocket costs before they receive care. Section 1311(e)(3)(C) of the ACA and Section 2715A of the PHS Act require disclosure of cost sharing that the individual would be responsible for paying with respect to the furnishing of a specific item or service by a participating provider in a timely manner upon the request of the individual. Sec. 1311(e)(3) has seen limited implementation for qualified health plans participating in the Federal Exchanges. By September 22, 2019
Price Transparency – Health Care Price and Quality Transparency Report (Sec. 3(c)) HHS, in consultation with the Attorney General and Federal Trade Commission, shall issue a report describing impediments to health care price and quality transparency (including why lower-cost providers avoid advertising) and recommendations to eliminate such impediments. See prior report titled, “Reforming America’s Healthcare System Through Choice and Competition,” issued by HHS, Labor and the Treasury, December 2018. By December 21, 2019
Establishing a Health Quality Roadmap (Sec. 4) HHS, DoD, and the VA shall develop a Health Quality Roadmap to align and improve reporting on data and quality measures across Medicare, Medicaid, CHIP, the Health Insurance Marketplace, the Military Health System and the VA Health System. The Medicare Prescription Drug, Improvement and Modernization Act (MMA) of 2003 contained a variety of sections focused on improving health care quality and efficiency. MMA encouraged increased efficiencies in health care through contractor reform, adoption of health information technology (HIT), implementation of a Medicare prescription drug benefit and strengthening of the Medicare Advantage program. MMA also authorized demonstrations focused on improving quality of care, including the Medicare Healthcare Quality Demonstration (Section 646 of MMA). Also, in 2018, an HHS-VA alliance enhanced efforts to reduce fraud, waste and abuse. By December 21, 2019
Increasing Access to Data to Make Health Care Information More Transparent and Useful to Patients (Sec. 5) HHS, in consultation with the Secretaries of the Treasury, Defense, Labor and VA, and the Director of the OPM, shall increase access to de-identified claims data. HHS shall make a list of priority datasets and shall report to the President on proposed plans for future release of these priority datasets and on any barriers to their release. In February 2019, HHS issued two proposed regulations (here and here) aimed at promoting the interoperability of health information technology (HIT) and enabling patients to electronically access their health information (more in the CMS Newsroom). These regulations are part of the Promoting Interoperability Program. HHS, the VA and DoD are all in the process of replacing their legacy health IT systems. Recent legislation in a House defense spending bill would require the DoD and VA to appoint leaders who would oversee interagency EHR modernization. Also, in September 2018, HHS released a report entitled “The State of Data Sharing at the U.S. Department of Health and Human Services,” which included a discussion on the increased sharing of claims data. By December 21, 2019
Consumer-Driven Health Care – High Deductible Health Plans (Sec. 6(a)) Treasury shall issue guidance to expand the ability of patients to select HSA-eligible high deductible health plans that would cover low-cost preventive care before the deductible is reached for individuals with chronic conditions. Preventive services that can be covered without a deductible are addressed in IRS guidance: Notice 2004–23, Notice 2004–50 and under section 2713 of the PHS Act (as added by the ACA). By October 22, 2019
Consumer-Driven Health Care – Tax- Deductible Medical Expenses (Sec. 6(b)) Treasury shall propose regulations to treat expenses related to certain types of arrangements (potentially, direct primary care and health care sharing ministries) as eligible medical expenses under section 213(d) of the Internal Revenue Code (IRC). Section 213 of the IRC allows a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise. HSA and FSA funds can only be used for qualified medical expenses as defined under section 213. By December 21, 2019
Consumer-Driven Health Care – Flexible Spending Arrangements (FSAs) (Sec. 6(c)) Treasury shall issue guidance to increase the amount of permissible FSA funds that can carry over to the next tax year. See IRS Notice 2013 -71, Publication 969. By December 21, 2019
Surprise Medical Bills (Sec. 7) HHS shall submit a report to the President on additional steps the administration may take to implement the administration’s principles on surprise billing. See “Remarks by President Trump on Ending Surprise Medical Billing,” White House, May 9, 2019, and Joe Grogan, Op-ed, “Trump aide: How we're aiming to stop surprise medical bills. By December 21, 2019
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