HealthCare Roundtable e-News – May 27, 2021

IRS Releases Detailed Guidance on COBRA Premium Subsidy

The IRS recently released detailed guidance on COBRA premium benefits as part of President Biden’s American Rescue Plan (ARP). The guidance includes 86 questions and answers relating to various COBRA implementation issues and examples, including guidance on eligibility, involuntary termination, reduction of hours, HRAs/FSAs, tax credits, and more, just ahead of the agency’s May 31st deadline.

As part of ARP, assistance eligible individuals (AEIs) will receive a 100% COBRA premium subsidy and additional COBRA enrollment rights from April 1, 2021, through September 30, 2021. According to the agency, the COBRA premium subsidy is implemented by means of tax credit and assistance will be available for workers who are not otherwise eligible for an employer plan or Medicare, although people enrolled in Affordable Care Act coverage can switch to COBRA.

The guidance clarifies that AEIs include those who qualify due to a voluntary or involuntary reduction of working hours or involuntary termination from employment. While waiting for additional guidance from the IRS, many employers were looking to the agency for clarity on the definition of “involuntary termination”. Many employers managed employees who wanted to keep working but quit because they had concerns about workplace safety or childcare, which the IRS does not generally qualify as involuntary termination. However, an employee who quits because of related challenges yet can still return to work, the employee might qualify for the assistance based on a voluntary reduction in hours. (InsideHealthPolicy)

The IRS’ full guidance on premium assistance for COBRA benefits can be found here.

West Health Study Claims H.R. 3 Could Save Employers $256 Billion by 2030

According to a recent study from West Health and Council for Informed Drug Spending Analysis, House Democrats’ proposed drug price negotiation bill, known as H.R. 3, could save employers $256 billion in insurance costs by 2030. The analysis also shows that that savings from the bill include a $195 billion reduction in premiums paid by employers $98 billion in premiums and cost-sharing savings for workers.

The study calls out prescription costs, which skyrocketed between 2007 and 2018 with list prices for branded prescription drugs increasing 159%. The study also highlights how employers all over the country would benefit from the bill’s savings, even if drug companies try to shift higher prices from public insurance to the commercial market. Many large employers have not expressed interest in supporting the bill or other drug pricing legislation without the guarantee that employers get the same prices as Medicare. (InsideHealthPolicy)

“For decades, American businesses have struggled to keep pace with ballooning prescription drug costs, and have had zero recourse to bring down prices,” said Tim Lash, President of the West Health Policy Center. “For American employers to remain competitive, the market failures that have allowed drug costs to increase without interference must be addressed. It appears that H.R. 3 and the considerable savings the legislation could generate might very well be the solution we’ve been waiting for.” Sean Dickson, the Director of Health Policy at West Health and is CIDSA Chair, said there is “no losing” in any of the potential outcomes from the bill.

“Even under the worst-case scenario, employers still come out ahead hundreds of billions of dollars and employees could expect greater take-home pay,” said Dickson.

AFHC Panel Reviews Research Highlighting Value of Employer-Sponsored Coverage

Last Wednesday, the Alliance to Fight for Health Care (AFHC) held a web panel to discuss new data on how employers expanded benefits and resources to support employees over the course of the pandemic, highlighting the coalition’s continued support for employer-sponsored insurance. The AFHC’s efforts come at a time when lawmakers are continuing to look for ways of lowering costs and expanding coverage post-pandemic. Panelists also discussed the economic impact of the pandemic and how employers have been reining in costs and supporting workers during the last 14 months.

The panel discussed research from University of Chicago economist Casey Mulligan that finds employer coverage provides $1.5 trillion in value beyond the direct cost of the insurance to employers, employees, and the government. According to coalition spokesperson Heather Meade, the research provides academic rigor that backs the coalition’s arguments on the value of employer coverage. (InsideHealthPolicy)

The panel also included insights from Tracy Watts, senior partner and national leader for U.S Health Policy at Mercer, whose study found that employers are open to government actions to tackle rising drug prices. Watts says there is an opportunity to manage costs by seeking higher-value care but stresses that it is not something that can happen overnight.

“Our latest survey of employer-sponsored health plans revealed relatively few employers made plan changes to shift the cost to employees in 2021,” Watts commented during the panel. “In fact, many employers expanded benefits or added new resources to support their employees that included access to digital health resources, expanded behavioral health, and additional voluntary benefits.” (InsideHealthPolicy)

Senators Reintroduce Legislation to Direct CBO to Consider Savings from Preventive Care

A group of Senators is preparing to reintroduce the Preventive Health Savings Act, a bill that would effectively direct the Congressional Budget Office to consider savings from preventive services when estimating the cost of legislation. Sens. Mike Crapo (R-Idaho), Ben Cardin (D-Md.), Angus King (I-Maine), and Kevin Cramer (R-N.D.) say the bill will encourage a “sensible review” of health policy that Congress believes will promote public health, according to the bipartisan group.

The proposal would effectively enable congressional leaders to request an analysis of preventive measures extending beyond the existing 10-year window for two additional 10-year periods. The bill would also define preventive care as “an action designed to avoid future health care costs that are demonstrated by credible and publicly available epidemiological projection models, incorporating clinical trials or observational studies in humans, longitudinal studies, and meta-analysis.” (InsideHealthPolicy)

According to the bill’s sponsors, the legislation will make it easier to invest in proven methods of life-saving disease prevention, such as cancer screening, vaccination, and community intervention, which will reduce long-term medical costs through improved health outcomes. Sen. Cardin stated that prevention lowers health care costs “by reducing the expense and severity of treatments. Continuing to shift towards more preventive health care saves lives and saves costs, so our budgets and accounting methods should shift too.”

NextGen ACO Demos Won’t Extend Beyond 2021, According to CMS

CMS announced on Friday (May 21) that the agency will not extend Next Generation Accountable Care Organization demos beyond 2021, though it will continue to test similar high-risk financial arrangements and alternative payment mechanisms under the Global and Professional Direct Contracting (GPDC) Model. CMS on Friday also announced that NextGen ACOs could move to the Medicare Shared Savings Program (MSSP) for 2022, and a Notice of Intent to Apply must be submitted between June 1 and June 7.

In the announcement, CMS said that the demos “have already built the operational capacity and processes to do value-based health care transformation work, and we believe there would be significant value in leveraging their experience and operational capabilities by offering eligible Next Generation ACOs the opportunity to participate in the GPDC Model test.”

The agency says that ACOs that want to participate in the GPDC model must meet all model eligibility requirements for Standard Direct Contracting Entities and give CMS materials demonstrating eligibility by June 14. The National Association of Accountable Care Organizations responded to the announcement saying that the group was “disappointed” in CMS’ decision not to continue the Next Generation ACO demo beyond this year but appreciated the opportunity to join the direct contracting demo.

Lawmakers Pass Bill to Close Orphan Drug Exclusivity Loophole After Election Tensions Lead GOP to Block Vote

Last Wednesday (May 19), House lawmakers passed a bill that will effectively close a loophole in the Orphan Drug Act allowing drug manufacturers to create monopolies on products. The bill passed 402 votes to 23 and has been backed by the Biden administration, saying that the legislation will help ensure access to high-quality, affordable therapies.

Known as the Fairness in Orphan Drug Exclusivity Act (H.R. 1629), the bill aims to amend the cost recovery prong pathway under the Orphan Drug Act to require drugmakers seeking orphan drug designations to demonstrate they don’t expect to recoup development costs. The bill is sponsored by Reps. Madeleine Dean (D-Pa.), Marc Veasey (D-Texas) and Brian Fitzpatrick (R-Pa.).

The vote on H.R. 1629 comes a week after House GOP members blocked a vote due to disagreements between Dean and Rep. Buddy Carter (R-Ga), a former co-sponsor of the bill who was removed after Carter’s vote in favor of challenges to Arizona’s and Pennsylvania’s presidential election results. Dean commented that she was “clear with [Carter] that I was not comfortable co-leading legislation with him” after he voted to challenge her state’s election results, to which Carter responded by urging fellow Republicans to vote against the bill.