On June 24, 2019, President Trump signed Executive Order Improving Price and Quality Transparency in American Healthcare to Put Patients First directing the Departments of Health and Human Services (HHS) and Treasury to develop regulations to require hospitals, healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care. Additionally, this Order includes provisions to direct rulemaking related to more eligible medical expenses and increased use of some account-based plans (e.g., FSA, HDHP, and HSA). While the Executive Order is light on content, focusing more on intent, the order does provide some information about what to expect in the next 60-180 days of HHS/Treasury rulemaking. See below for those details that may potentially affect employee benefits plans.
Informing Patients About Actual Prices
Within 60 days (August 24, 2019) new rules will be released requiring hospitals to publicly post standard charge information for services, supplies, or fees billed by the hospital or provided by employees of the hospital in an easy-to-understand, consumer-friendly, and machine-readable format.
- Including charges and information based on negotiated rates and for common or shoppable items and services.
- Require regular updates to the posted information and establish a monitoring mechanism to ensure compliance.
- Within 90 days, comments will be solicited from healthcare providers, health insurance issuers, and self-insured group health plans allowing stakeholders to comment on workability of the new rules.
Increasing Access to Data to Make Healthcare Information More Transparent/Useful to Patients
Within 180 days, access to de-identified claims data from taxpayer-funded healthcare programs and group health plans for researchers, innovators, providers, and entrepreneurs will be permitted to facilitate the development of tools that empower patients to be better informed as they make decisions related to healthcare goods and services. Access to this data will also enable researchers and entrepreneurs to locate inefficiencies and opportunities for improvement, such as patterns of performance of medical procedures that are outside the recommended standards of care. This new opportunity may open the world of data for many plan sponsors and related partners who assist them with claims management.
Empowering Patients by Enhancing Control Over Their Healthcare Resources
Within 120 days, the Treasury will expand the ability to select HSA-compatible High-Deductible Health Plans (HDHP) to cover low-cost preventive care before the deductible, for medical care that helps maintain health status for individuals with chronic conditions.
Regulations/Guidance to be released within 180 days:
- Additional expenses related to certain types of arrangements will be eligible IRC section 213(d) medical expenses.
- Increase permitted Flexible Spending Account (FSA) carryover amounts.
Congressional Bill on Healthcare Fee Transparency
Similarly, Congress has in its pipeline a bill addressing what some are calling the “low hanging fruit” of the insurance industry: fee transparency. With bipartisan support, Congress is considering the “Lower Health Care Costs Act” but this bill is yet to make it anywhere near a vote. In what would be the most significant health care legislation since the Affordable Care Act (ACA), this draft legislation proposes the largest federal overhaul of the health insurance market. This bill is notable for its focus on areas where there is bipartisan consensus.
The Act contains Five Sections to address systemic issues that the Act’s drafters believe create excessive and unexpected costs for health care consumers.
- Surprise medical billing
- Prescription drug pricing
- Transparency
- Public health, and
- Health information.
The section affecting the insurance industry proposes revising the Employee Retirement Income Security Act – known as ERISA – which sets minimum standards for most private health and retirement plans. Specifically, the bill would potentially require the disclosure of compensation from insurers and other service providers, in writing, at the time an employer signs up for benefits. The recommendation is similar to transparency requirements existing for ERISA plans subject to Form 5500 reporting. While the Form 5500 requirement includes some transparency mandates, this new bill intends to expand this requirement to include small plans and other plans not currently subject to Form 5500 reporting.
In Conclusion
This Executive Order, and the related bill, are in the beginning stages of the regulatory process and any outcome is hypothetical. Nevertheless, the Executive Order addressing healthcare and self-funded plan insurance cost transparency is signed and we will soon see what the rules end up looking like starting in sixty days. While one can expect the bulk of the action required by these new rules to rest with the healthcare providers and insurance carriers, there will likely be notice requirements applicable to plan sponsors of those plans.
Using price transparency to decrease the cost of coverage and increase knowledgeable consumerism is not new. These types of rules (or similar) have been enacted in some states with little to no known effect on reducing costs. Now is an important time to let Leavitt Group provide you one of their most important value-adds: staying on top of all legislation affecting you. Once the new rules are released, Leavitt Group will issue guidance. So be sure to sign up for our compliance alerts!