2023: Regulatory Items to Watch

Last week, the politically interested got to watch a preview of how the United States federal government will approach legislating for the next two years – it’s not pretty. With the narrowly divided U.S. House of Representatives barely eking out enough votes to select a Speaker, nearly coming to the time old tradition of fist fights in the process, passing meaningful legislation will be fraught, regardless of the issue at hand. None of that takes into account that Democrats still control the U.S. Senate (even if also by a narrow margin) and the priorities of both chambers are now split by party. There may be some surprising room for agreement though. As of the time of this writing, this may well be the first Republican-controlled Congress that is not riding on a platform of repealing or replacing the Affordable Care Act (ACA). That doesn’t mean potentially meaningful changes couldn’t come, it’s just highly unlikely.

That leaves the courts, which we discussed in our last blog, and the Biden Administration’s own executive authority through regulatory agencies to carry the burden of change through the 2024 election cycle. A few things to remember include the previous administration’s actions to pack the federal judiciary, including Supreme Court seats, the dynamic controls of implementation priorities between states and the federal government, and the Biden Administration’s support for insurers over the last two years will shape what we might see in terms of regulatory action.

A prime example of all of these factors playing out can be seen in Judge Reed O’Connor’s September 2022 ruling on Braidwood, wherein O’Connor ruled the ACA “preventative services mandate” was unconstitutional particularly because of the plaintiff’s objections to covering pre-exposure prophylaxis (PrEP) as violation of their religious beliefs and because of some wonky interpretation of delegation of powers or what defines an agent of the government and the process by which those agents are appointed. Notably, O’Connor has been previously overruled on highest profile rulings, mostly those with extreme anti-gay and anti-ACA positions…repeatedly. As this case makes its way through higher courts, the 5th Circuit is next, states may have the chance to implement their own versions of minimum benefits and services insurers and covered entities must provide. Much like the issue of Medicaid Expansion, this type of action would further disparities across states in terms of access to care, but would provide some protection for minimum coverages for residents of those states. Here we have the Biden Administration’s interpretation of both the law and the entity responsible for implementing the law, a federal court’s disagreement on process, and the state dynamic of “what do we do now?”

Let’s take a look at the annual Notice of Benefit and Payment Parameters (NBPP), issued to describe how insurers and providers must handle certain nuanced rules and regulations for a given benefit year. NBPPs are generally issued in the year prior to when the rule should go into effect, sometimes a little earlier but in enough time for insurers to make sure their plan offerings comply with the rule. The 2023 NBPP included provisions on the ACA’s non-discrimination rule and an effort to strengthen coverage and services to LGBTQ patients. This operated as a nod toward the Biden Administration’s aim at addressing rule-making for the ACA’s actual non-discrimination rule, known as Section 1557 (which has been subject to numerous lawsuits, including those in front of O’Connor). The 2024 NBPP, proposed rule (not final), looks to address some definitions of “network adequacy”, or making sure the benefit networks offered by insurers are meaningfully useful for patients and, with some theorized framework, hopes to make selection of a qualified health plan off the federal marketplace a little bit easier by introducing standardization. Watching NBPP final rules and processes will remain a prime opportunity to advocate with regulators, both state and federal, and read tea leaves of other regulatory actions down the road (in the 2023 NBPP final rule, which includes answers to some comments made about the proposed rule, the Biden Administration directly answered that it would be addressing Section 1557 in response to questions as to why the non-discrimination provisions did not go further to more explicitly protect transgender patients).

The Biden Administration will also get the chance to start to implement and define the rules around its prize jewel, Inflation Reduction Act (IRA), which, among other things, introduces the idea of drug price negotiation in public payer programs like Medicare.

Before we jump on some details to watch there, it’s important to note, the provisions of the IRA affecting drug pricings do not necessarily have a direct impact on what patients pay at the pharmacy counter and have zero impact on those patients not enrolled in affected public payer programs. Furthermore, when politicians of all stripes tout “saving money” in public payer programs, they’re not necessarily talking about patients saving money. Indeed, most of the time they’re not. They’re talking about reducing the costs to the federal government for operating those programs – sorta. The way it works is the federal government can’t really handle all of the medical and medication claims associated with these public payer programs, so they contract with private insurers or encourage patients to enroll in supplemented private plans to handle these claims and reduce the labor and expertise burden on the federal government. States do this too with Medicaid. However, those companies, particularly pharmacy benefit managers (PBMs) handle the costs of medications and formularies, engage in all the same dirty tricks with their public payer programs as they do with their private plan offerings, including abusive prior authorizations, step therapy, network limits, and steering patients to mail-order pharmacies which those entities then own. There’s little oversight given and limited regulatory action to prevent these private entities handle the administrative processes of these programs from abusing their role for the sake of their own profits.

Indeed, pharmacy benefit managers came about in our ecosystem promising to negotiate prices on medications already. And they have, in large part, successfully done so, either consuming dollars through rebate programs or negotiating lower prices by buying in bulk. However, PBMs haven’t shared those savings with patients, despite that being the selling promise. In fact, PBMs have been one of the fastest profit-growth businesses in the country because they’re not passing on those savings to patients.

That’s right, drug prices are already negotiated. So why haven’t we, as patients, really seen the benefit of that? Why are patients having to argue with their insurers constantly to get the medication coverage they need or watching their medication formularies shrink? Cuz PBMs are in desperate need of regulatory control. Hopefully, the Federal trade Commission’s most recent inquiry into their business practices will shed some light on these issues and well-motivated constituents can remind their Senators and Representatives we need more action. We’ll also need pressure on the Biden Administration on these issues. They’ve dodged it so far.

Back to the IRA, there’s some pretty cool stuff in the health care pieces. Particularly, the cap on insulin copays for Medicare patients is a big deal. The limit on out-of-pocket costs Medicare patients will pay on the medications is also a massively big deal. These are the provisions that will benefit affordability the most for most Medicare patients. But we’ll need to watch for our veggies on this plate, as it were. The trade-off might look like PBMs further limiting formularies and advocates need to keep an eye out for that. Cautious advocates have much to celebrate in these pieces, as they directly affect affordability of and access to care, and should remain watchful for how implementation and enforcement rolls out but also as to any unintended consequences which may need additional answers later.

Now, the drug pricing and negotiation pieces on the other hand, might dicey as time goes on. Nothing in the IRA requires any “savings” private administrators might receive or the federal government might view to be passed onto patients. Nothing. Furthermore, certain pieces of the IRA prevent judicial review, which means if patients find themselves adversely affected by a regulatory move or certain implementation of the IRA, they can’t sue to government to fix the issue. That’s never a good thing. It’s also a particularly bad thing to include in any legislation, especially as we look down the barrel of patients losing their right to private action to seek enforcement of non-discrimination and disability protection laws (again, see our previous blog). We should always retain the right to seek redress under our judiciary, even if only to give light to how “bad” legislation (or short-sighted provisions) might be hurting patients. One of the pieces affected by the non-review bit includes the “what-if a manufacturer refuses to play ball on negotiation of a particular medication?” The answer is the feds have the right then to remove ALL of that manufacturer’s medications from covered public payer programs. Now, that might seem like the manufacturer is the bad guy there. But the drugs targeted by the IRA are the highest cost medications on the market and the highest cost medications on the market are those typically designed to treat or manage rare, chronic, or life-threatening illnesses and in which there are limited or no alternatives. These areas also happen to be where manufacturers have been leading medications for quite some time, to the benefit of patients. More personalized medications mean more specific care for a patient’s needs. The “negotiation”, which is really not a negotiation when an ethical manufacturer seeking to recoup costs and generate enough revenue to reinvest in discovering and developing new medications, investing in underserved disease states, is essentially forced to take a hit or have their entire portfolio yanked out from patients. “Take the hit or we’ll hurt the people that it’s your mission to serve.”

Now, I have plenty of criticism for our industry friends. This shouldn’t be taken as “oh you’re a shill” moment. Rather, my biggest disagreement is the inability of patients who might lose access to medications to seek redress and the lie which premises the need for the federal government to “negotiate” prices. As described above, negotiation already happens and they dynamic of this law isn’t “negotiation” but hostage taking. And patient access to care is what’s being held hostage. None of that addresses what some suspect will be manufacturer responses by consolidation in the industry and increases in launch prices. Essentially, these provisions only put a bandaid on a gaping wound and it’s not even on the wound the public cares most about. It’s kinda hanging off to the side.

Ultimately, my view is the federal government should gladly invest in our care. “Cutting cost” has always and will continue to sound an awful lot like “that’s not something we really wanna spend money on or invest in”, regardless if it’s a private insurer or a politician. Our care, our health, our families matter and they should be an investment priority for political leaders.

We’ll spend plenty of time later this year discussing the other “alligators” “closer” to patients than manufacturers and why we need to address those actors first.

Future legislation that seeks to make care more affordable and accessible needs to work from the perspective of patients, not insurers.

The last thing we’re gonna touch is something that pretty much every patient advocate can celebrate, so long as it’s done right. In the later end of 2022, the Biden Administration proposed a rule to improve patient and provider experiences with the administrative burden insurers love to impose on us. Particularly aimed at addressing electronic health data exchanges and streamlining prior authorizations (PAs), a process which has been wildly abused by payers, the rule hopes to improve patient experiences in care. Often times, PAs result in denials of coverage in which a patient (or provider on a patient’s behalf) must appeal to the exact same payer that denied coverage in the first place. Those letters are often vague or confusing, or in my own situation for hormone replacement therapy, tell patients to try something they’ve already tried or was already included in the provider’s rationale for a specific medication or treatment course. The rule requires more specificity in reasons for denials, which would allow a provider to more directly address those reasons as inappropriate for the patient or, as is the case sometimes, not even based in medical science. The rule also seeks to speed up the process. Currently, many patients have to wait weeks if not months to get responses on PAs or appeals. The rule would require most PAs to be answered inside of 7 days or inside of 72 hours, if it’s urgent. The rule also forces payers to begin using more modern technology to review PAs. Rather than outdated forms, faxes, and even mail, payers would have to provide either a web portal or direct email address in which patients and providers might more securely ensure their request has been received. Lastly, the rule would require payers to post specified PA metrics. Be it care or medication, patients and providers would be able to view on a payer’s website just how often they deny care and how much burden that payer is going to place on them to receive the care they’re entitled to.

Now, the PA rule is, as many, limited in scope but not by much. It would apply to Medicaid managed care plans, ACA plans, the Children’s Health Insurance Program, and Medicare Advantage plans – nearly everybody.

Regulatory actions won’t be limited to these so keep an eye out!