2021 Health Policy Priorities: Bipartisanship the Only Path to Success

Beginning on Jan. 20, Democrats will hold a “trifecta” – control of the White House, Senate and House of Representatives – for the first time since Barack Obama’s first term in 2009.

Democrats have signaled that they intend to pass major health care legislation this year. While health care legislation has been the flashpoint of major partisan battles in recent years – most notably the passage of the Affordable Care Act in 2010 and its attempted repeal in 2017 – there is a real window for bipartisan support on legislation focused on reducing health care costs and improving quality. Over the past decade, the rate of inflation for medical services has averaged nearly 3% annually – roughly twice the rate of inflation for all other products and services. Unsurprisingly, recent public polling demonstrates that lowering the cost of care for individuals is the most popular health policy among voters. As the largest purchasers of health care, large employers know well the impact of the relentless increase in health care costs on their businesses and on their employees.

Post-COVID 2021 Policy Priorities for Large Employers

Like policymakers, employers are focused right now on stemming and ultimately defeating COVID-19. Once the pandemic is largely over, they will look to policymakers to pivot quickly to directly tackle high health care costs, inadequate quality and stubborn inequity in health care. But that does not mean it will be easy. Truly addressing the underlying problems in our health care system means directly challenging entrenched interests that perpetuate the broken status quo. That’s why taking on these issues can and should be bipartisan in nature.

Large private employers and public health care purchasers will be watching the actions of the Biden administration and new Congress with special focus on the following issues:

1. Broken Health Care Markets

Our health care system is rife with economic distortions, including inadequate competition, opaque pricing, uninformed consumers and a lack of actionable measures of quality. Large employers are interested in the changes policymakers will make to strengthen competition and transparency. Where markets have failed entirely or where there is no market, federal policymakers have a responsibility to directly manage prices, with an emphasis on strengthening competition via:

• Stronger health care anti-trust enforcement, including prohibitions on anti-competitive practices, to address the problems of industry consolidation, market power and high prices.
• Price transparency at the individual, health plan and provider levels, including unveiling negotiated prices between providers and health plans.
• Policies to increase healthy price competition among brand name drugs, generics and biosimilars

In highly consolidated health care markets, where dominant health systems have already driven up prices, it may be impossible to reinstate healthy competition. This may be particularly true in rural areas with very limited numbers of hospitals and physicians. In such cases, the federal government should directly set or constrain prices for all purchasers at fair and reasonable levels.

For pharmaceuticals with no effective competition (including many brand-name drugs under patent and/or market competition) the federal government should negotiate fair and reasonable prices available to all payers, as well as institute caps on inflation for prescription drugs currently on the market.

2. Rapid Acceleration of Payment Reforms from Fee-For-Service to Value-Based Models

Policymakers have long recognized that the fee-for-service payment system promotes higher volumes of care without accountability for the quality of care or patient experience. It is time for leaders to insist on the rapid adoption of value-based payment models for both public and private payers.

Population-based payment models, as described in the Health Care Payment Learning and Action Network’s framework, are the best way to provide flexibility to physicians and health systems while ensuring accountability for the total cost of care. The payment models must also include accountability for quality, patient experience and equity.

In the wake of the pandemic and the rapid rise of and need for remote care options, it is important to note that population-based payment models provide the right incentives for the expanded and appropriate use of telehealth services.

3. Adoption of Robust Performance Measurement with Focus on Health Equity

The ability of our health care system to deliver higher quality outcomes depends on the adoption of standardized and mandatory performance measures. Such measures are essential to the widespread adoption of value-based payments.

Performance measures should include clinical outcomes, patient-reported outcomes, appropriateness and equity. And they should be standardized and required for all physicians, hospitals and other clinicians to provide useful comparable information to patients, consumers and purchasers.

For too long, however, health care quality measures have failed to address underlying racial, ethnic and other disparities in health care. Performance measures should include the capture of racial and ethnic identification data. Further, quality improvement initiatives should focus on areas of greatest disparities, such as maternal and infant care and COVID.

Each of the policies described has enjoyed bipartisan support in the past. With just 50 Senators caucusing with Democrats and a five-seat majority in the House, the most viable path toward legislative success rests on bipartisanship.

For more on what large employers are prioritizing in 2021, read 7 Large Employer Health Care Priorities to Watch in 2021.

5 Health Care Provisions in the COVID Relief Bill Impacting Employers and Families

Over the weekend, congressional negotiators reached a deal on a more than $900 billion COVID-19 relief package. This legislation will be tied to a year-end government funding bill. Among the many provisions in the bill are several of particular interest for employers and health care purchasers.

Below is a summary of the critical items of interest:

1. Surprise Medical Bills

After a two-year legislative fight, Congress is poised to finally pass legislation to ban surprise medical bills.

Consumer protections: If a covered individual receives out-of-network care without their consent (whether in an emergency or non-emergency situation), the individual will only be expected to pay their normal in-network cost sharing amount.

Negotiation between providers, insurers: The remaining balance of the bill will be negotiated between the health insurer and the provider. The two parties will have 30 days to negotiate a mutually agreeable payment rate. If they fail to reach agreement after 30 days, either party may request an independent dispute resolution process (IDR). Under IDR:

• Both parties will submit a “best final offer” to an independent arbitrator.
• Both parties may submit additional information justifying their offer, but the arbitrator is banned from considering providers’ billed charges and the payment rate from public payers, including Medicare. Further, the arbitrator must consider the median in-network payment rate for the service in the geographic area.
• Using “baseball style” arbitration, the arbitrator must choose one of the two offers.
• The arbitrator’s decision is final. The losing party is responsible for payment of the IDR cost.

Most care settings affected: The surprise medical bill protections apply to inpatient hospitals settings and outpatient care in emergency departments, outpatient clinics and surgical centers and clinician offices. They also apply to air ambulance transport. Unfortunately, they do not apply to ground ambulance transport services.

2022 implementation: Protections against surprise bills will take effect for health plan years beginning on or after January 1, 2022.

Impact: The consumer protections included in the legislation will put an end to the scourge of surprise medical bills and reduce the ability of certain providers from driving up costs by implicitly threatening to bill patients if they are not included in insurance networks. However, there is concern that the IDR process may be “gamed” by providers and will be less successful at holding down costs for purchasers than the proposed alternative of a benchmark payment rate for surprise bills. Nevertheless, the Congressional Budget Office and other independent analysts believe that the legislation’s requirement that the arbitrator consider the median in-network payment amount will be effective at holding down costs.

2. Health Care Price Transparency

No more gag clauses: The final bill will ban “gag clauses” from health plan/provider contracts. These clauses prohibit plans from disclosing to plan sponsors and individuals’ financial information including the allowed amount and provider-specific negotiated payment amounts for items and services covered by the health plan.

Drug spending disclosures: The bill also requires annual disclosure by health plans regarding spending on prescription drugs, including the most frequently dispensed drugs, the highest cost drugs, the drugs with the fastest rising spending and the effect of drug rebates, fees and other renumeration plan premiums.

Impact: The ban on gag clauses in provider/plan contracts will provide meaningful, provider-specific information to plan sponsors and individuals regarding prices. However, Congress chose not to include accompanying legislation that would give plan sponsors the tools they need to use this information to stop dominant health care systems from engaging in anti-competitive behavior. This will, unfortunately, allow health systems to continue to drive up costs for purchasers and consumers without improving quality.

In addition, Congress chose not to include meaningful reform to the way in which health plans and pharmacy benefit managers (PBMs) purchase drugs. Previously considered legislation would have provided drug-specific price disclosures, discounts and rebates, and banned PBMs from engaging in “spread pricing,” in which the PBMs directly profit from rebates and discounts they negotiate rather than passing them onto plan sponsors. Instead, the final language in the bill provides only high-level aggregated information without a ban on spread pricing. It is unlikely the legislation will result in any change in behavior by PBMs and health plans.

3. Direct Economic Relief

Stimulus payments: Up to $600 per person in direct stimulus payments to individuals, phasing out for families with income exceeding $75,000.

Increased financial support: Enhanced unemployment insurance benefits of $300 per week for up to 11 weeks.

Help for small business: $240 billion for Paycheck Protection Program loans for small businesses, including non-profit organizations. Qualifying PPP recipients will need to demonstrate significant revenue losses in 2020.

Impact: The enhanced unemployment insurance and extension of the paycheck protection program will help struggling families and keep the economy afloat during the pandemic. However, Congress did NOT include COBRA subsidies for employees who have been laid off or furloughed – many of whom have joined the ranks of the uninsured since the pandemic began. These subsidies would have provided important financial support and medical continuity for families affected by job loss.

4. COVID Response

The bill provides additional fund for vaccines and COVID testing practices intended to help get the pandemic’s spread under control.

Vaccines: $20 billion for purchase of vaccine doses by the federal government; $8 billion for vaccine distribution

Testing: $20 billion for states to conduct testing and contact tracing

Provider relief: $20 billion in additional economic relief for health care providers.

Impact: The COVID response funding made available under this bill is critical to helping the country exit the pandemic as swiftly and effectively as possible – the necessary step to reinvigorating the economy.

5. Flexible Spending Account Rollover

The legislation allows flexibility for taxpayers to rollover unused amounts in their health and dependent care flexible spending arrangements (FSAs) from 2020 to 2021 and from 2021 to 2022. It also permits employers to allow employees to make a 2021 mid-year change in contribution amounts.

Impact: This provision gives employers and employees flexibility in managing unexpected changes in health care costs during the pandemic.