More than three months after enactment of the landmark CARES Act, and more than two months after the House of Representatives passed the HEROES Act – their own “Phase 4” legislation – the Senate is finally taking steps to pass another major bill responding to the still raging COVID-19 pandemic. As the likely last chance to pass major legislation before the November elections, this bill is particularly vital for employers and health care purchasers seeking to stay financially stable and manage COVID-19 costs during the sharpest economic contraction since the Great Depression.

Congressional and White House negotiations over this high-stakes (and likely more than $1 trillion) bill will dominate the headlines coming out of the nation’s capital for the next several weeks. PBGH and its employer/purchaser allies have weighed in with Congress and the Administration, including in two letters this week, focused on testing and our other priorities, signed by more than 30 national, regional, and local purchaser organizations. Here are the six employer priorities you should watch out for in the weeks ahead and the six sticking points that could spell trouble for the bill.

What Employers and Purchasers Want to See

1. Stopping Price Gouging and Ensuring Fair Prices: Since the pandemic began to affect the United States in February, stories have abounded about bad actors engaging in egregious pricing of critical equipment. While largely limited to personal protective equipment (PPE) and testing, price gouging could get worse as the pandemic wears on. Of particular concern, the CARES Act, enacted in March, stipulates that all health insurance plans must cover the cost testing in full for employees without placing any limit on what a provider may charge for a test. The House-passed HEROES Act could further exacerbate the problem by mandating coverage – with no out-of-network price limitations — for all COVID-19 treatment.Large employers are urging Congress to not mandate that they cover these costs in full without appropriate guardrails to ensure fair prices for out-of-network care and testing. Further, a blanket ban on price gouging for COVID-19 supplies and services, enforceable by the Federal Trade Commission and state attorneys general, is essential to ensuring a fair and reasonable market.
2. Banning Surprise Billing: Surprise billing has been a top priority for employers and purchasers for several years, and while Congress has come close to banning this egregious practice, it has not yet reached a final agreement. Recognizing that this may be their last opportunity, congressional leaders, led by retiring Sen. Lamar Alexander (R-TN), are pushing to include a ban in the upcoming bill. Sen. Alexander’s legislation would ban surprise billing while stipulating a market-based benchmark price for out-of-network care. Such a benchmark has been found to reduce health care costs over time for consumers, purchasers, and taxpayers alike.
3. Providing Subsidies for COBRA Coverage: The pandemic has led to the sharpest rise in unemployment in the nation’s history. With millions of people laid off or furloughed, the number of uninsured people has spiked. Employers want to ensure the availability of direct subsidies for COBRA coverage so that laid off and furloughed workers can continue to stay on their employer-sponsored insurance without having to pay the full – and often unaffordable – premium.
4. Federal Funding for Testing: Nearly six months since COVID began to spread in the United States, the country still lacks sufficient diagnostic tests to provide timely access to COVID-19 diagnosis. With obvious concern about getting the U.S. economy back on its feet, and a recognition that the health of American citizens and the economy are interwoven, large employers are looking to Congress to infuse new federal spending to ensure timely access to tests for all who need them.
5. Financial Support to Struggling Primary Care Providers: Paradoxically, the pandemic has led to a significant decrease in utilization of health care, particularly for primary care providers. Many such providers are struggling to keep their doors open during the ongoing pandemic. According to survey findings from a provider survey conducted by the Larry Green Center at Virginia Commonwealth University, 40% of primary care clinicians say they may lack the financial resources to stay open through the end of August. Employers are looking to Congress to set aside a portion of funds already appropriated to the Provider Relief Fund for struggling primary care providers.
6. Policies to Mitigate Risk in the Employer Health Insurance Market: While health care spending is down since the beginning of the pandemic, many patients are deferring necessary care. Faced with a possible spike in utilization next year, purchasers are unable to accurately project spending into 2021. That’s why they’re largely supporting the establishment of a one-sided risk corridor that would provide financial support to purchasers if costs substantially exceed projections.

The August recess is officially scheduled to begin on Aug. 8, but negotiators are already signaling that they may not reach final agreement by then. Hopefully, employers will have a clear indication of what is in and what is out by the middle of the month.

The health care provisions of COVID-19-related legislation to date have focused primarily on ensuring health care providers have the resources they need to treat the influx of affected patients. In addition, Congress has rightly taken steps to slow the spread of the virus, ensure that patients have access to needed tests and treatment, and protect workers and businesses from the collapsing economy.

As Congress considers “Phase 4” legislation, it should seek to build upon the foundation set by the earlier legislation, with a particular focus on the downstream financial effects of the crisis. In the best interest of American businesses and consumers, the next wave of legislation should focus on seven priorities.

1. Maintain and Strengthen Primary Care

Many primary care groups are reporting dire financial situations and the possibility of imminent closure due to the loss of patient revenue during the COVID-19 crisis. In addition to the funding provided to-date for hospitals and providers (an unknown portion of which is likely to make it to primary care providers), Congress should specifically earmark financial support to vulnerable primary care practices. This is critical to ensure that primary care survives and thrives in the aftermath of the COVID-19 crisis.

In addition, Congress should take this opportunity to accelerate the move away from fee-for-service payment for primary care to a model that is prospective, population-based, team-based and addresses social needs[1].

2. Prohibit Price Gouging and Ban Surprise Billing

Media reports indicate that personal protective equipment (PPE) and other supplies have seen exorbitant price increases.[2] We need to ensure that the small number of unscrupulous actors do not take advantage of this crisis to engage in price gouging. During the pandemic, policymakers should explicitly ban price gouging on any health care items or services, prosecutable by the Federal Trade Commission and State Attorneys General.

In addition, Congress has been debating legislation to ban surprise medical bills for more than a year. With tens of thousands of people now seeking care for COVID-19, many will be forced to see out-of-network providers due to the overwhelmed health care system. It is more important than ever that Congress prioritize banning this abusive practice. This legislation should protect patients and hold down health care costs by using a local, market-based benchmark payment rate for out-of-network care.

3. Ensure Accountability and Transparency for Federal Funds

The CARES ACT (H.R. 748) and subsequent legislation provide more than $175 billion in direct financial support to hospitals and other health care providers. This funding is in addition to other financial support to hospitals, including suspension of budget sequestration, extension of Medicare Disproportionate Share Hospital payments, COVID-19 related add-ons, and others. Unlike the funding provided to other businesses, however, this funding provided to hospitals and other health care providers does not come with any meaningful transparency or accountability. To ensure reasonable oversight of federal taxpayer funding, policymakers should extend the same requirements as stipulated for other businesses.

4. Provide Risk Mitigation Mechanism

According to an analysis prepared for Covered California, the potential cost of coverage for COVID-19 related services could exceed $200 billion.[3] In the short-term, those costs may be offset by reduced demand for elective procedures. In the longer term, however, pent-up demand could substantially increase utilization once the pandemic has subsided. With health plans unable to accurately forecast cost effects, their fear about future costs could cause premiums to spike by as much as 40 percent.[4] Congress should avert potential premium spikes by enacting policies that protect insurers and self-insured employers from unexpected costs in the 2020 and 2021 plan years. Such policies could include a reinsurance mechanism or one-sided risk corridor, which would “kick in” only if costs exceed a certain threshold.

5.     Expand Access to Affordable Coverage

With millions of Americans losing jobs and income as a result of social-distancing measures, Congress should take immediate action to make affordable coverage available to those who have lost their jobs and access to employer-sponsored coverage.  Congress should provide subsidies for COBRA coverage for the duration of the crisis and offer a special open enrollment period for the health care exchanges. In addition, we need to find ways over the longer-term to provide coverage to everyone – for example, with enhanced subsidies for low-income people to buy individual coverage and financial incentives for all states to expand their Medicaid programs. At the same time, we need to ensure that coverage expansion is accompanied by meaningful policies to reduce the costs of our health care system.

6.     Prevent “Price Creep”

The CARES Act provides more than $175 billion in direct financial support to hospitals and other health care providers to help them deliver care to all patients during this public health emergency. However, despite this infusion of funds, we are concerned that some hospitals and providers will increase their future prices above what they had originally planned. This would cause overall health care costs to increase dramatically.  To prevent this, policymakers should consider limiting price increases.

7. Place a Moratorium on Industry Consolidation

During the COVID-19 crisis, many independent physician practices are under extreme financial duress, and some hospitals and health systems may take advantage of this opportunity to acquire these vulnerable practices at “fire sale” prices. To prevent this anti-competitive behavior, which has been shown to increase prices in the commercial market, Congress should consider a temporary moratorium on mergers and acquisitions among hospitals, health systems, health plans and physician groups. 

 

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[1] One example of this is the AAFP’s proposed Advanced Primary Care Alternative Payment Model that was approved by PTAC. https://www.aafp.org/news/macra-ready/20171219apc-apm.html

[2] https://www.cbsnews.com/news/china-ppe-us-buyers-knock-offs-price-gouging/

[3] https://hbex.coveredca.com/data-research/library/COVID-19-NationalCost-Impacts03-21-20.pdf

[4] ibid.