In 2023, employers will continue to focus on complying with transparency requirements designed to provide greater insight into the prices of prescription drugs and other healthcare. Other issues in the spotlight include health plan coverage of gender, family planning (including abortion) and behavioral health. With respect to gender and family planning, employer-sponsored health plans must comply with rapidly changing federal and state laws and regulations, assess litigation risks, and offer health coverage that aligns with employees’ needs and the employer’s diversity, equity and inclusion (DEI) goals. Employers may want — or have — to expand behavioral health coverage in response to the nation’s mental health crisis and tougher enforcement of the Mental Health Parity and Addiction Equity Act (MHPAEA).
This GRIST summarizes expected 2023 compliance and policy developments affecting health and leave benefits and suggests action steps for employers. Topics covered include:
- Congressional outlook. November’s midterm elections and the possibility of new majorities in the next Congress will have important repercussions for healthcare policy in 2023. In the meantime, lawmakers are eyeing a potential healthcare package that could pass with bipartisan support this year in a post-election lame-duck session or carry over to 2023. Proposals of interest to employers would extend telehealth flexibilities, improve care for mental health and substance abuse, provide greater transparency into pharmacy benefit manager (PBM) practices, increase employer penalties for MHPAEA noncompliance, codify federal protections for same-sex marriages, and require parity for kidney dialysis benefits relative to benefits for other chronic medical conditions.
- Regulatory outlook. The Biden administration is likely to continue aggressively using its executive authority and regulatory tools to push its policy goals. Watch for enforcement activity and guidance on implementing the MHPAEA, the Affordable Care Act (ACA) and the transparency reforms enacted by the 2021 Consolidated Appropriations Act (2021 CAA), including the ban on surprise billing and prescription drug data collection (RxDC) reporting. The high cost of prescription drugs will remain in focus. In addition, the COVID-19 public health emergency (PHE) and national emergency (NE) will likely conclude in 2023, leaving health plans to unwind various temporary measures either permitted or mandated by law or regulators.
- Litigation outlook. Litigation may limit the Biden administration’s efforts to expand healthcare reforms. Challenges to existing healthcare reforms pending in the courts target the ACA’s preventive services mandate, surprise billing regulations and ACA Section 1557 nondiscrimination regulations.
- State outlook. At the state level, employers can expect states to implement paid leave laws and prescriptions drug pricing reforms, among other health coverage mandates.
A number of bipartisan proposals have a chance of making it into 2022 year-end legislation, despite midterm election tensions and Republican anger over the Inflation Reduction Act (IRA) (Pub. L. No. 117-169), the Democrats’ budget reconciliation bill recently enacted on party-line votes. While the new law makes big changes to Medicare prescription drug pricing and coverage, the act’s provisions generally don’t directly affect employer plans. The legislation also drops many employer-focused proposals contained in earlier, more expansive versions of the bill known as the Build Back Better Act.
Outlook for healthcare proposals with bipartisan support
Democrats’ nearly two-year focus on achieving their policy goals through the reconciliation process without Republican support has fueled pent-up demand for final action on several bipartisan priorities. Though Congress has gone home to campaign ahead of the midterm elections, lawmakers are actively considering the contours of a healthcare package that could hitch a ride on an omnibus year-end measure to keep the government running when current funding expires on Dec. 16. That package could include proposals on telehealth, mental health, same-sex marriage rights, insulin costs and kidney dialysis benefits.
Extension of telehealth flexibilities. Lawmakers want to extend a telehealth provision in the Coronavirus Aid, Relief and Economic Security (CARES) Act (Pub. L. No. 116-136) that allows:
- Employers to offer predeductible coverage of telehealth and other remote care services in health savings account (HSA)-qualifying high-deductible plans (HDHPs)
- Otherwise HSA-eligible individuals to receive predeductible coverage for telehealth and other remote care services from a stand-alone vendor outside of the HDHP
Neither type of predeductible telehealth coverage will jeopardize an individual’s eligibility to make or receive HSA contributions while the temporary relief is in place. The relief originally applied for plan years starting on or before Dec. 31, 2021. Congress extended this relief in the 2022 Consolidated Appropriations Act (2022 CAA) (Pub. L. No. 117-103), but only from April 1 through Dec. 31, 2022 — not retroactively to Jan. 1, 2022. Bipartisan bills (HR 5981, S 1704) would make this relief permanent, although another temporary extension, perhaps for two years, appears more likely.
Congress may also extend the temporary PHE relief that treats stand-alone telehealth benefits and other remote care services for benefits-ineligible employees (e.g., part-time or seasonal workers) like an excepted benefit, exempt from many ERISA and ACA group health plan mandates. Unlike the temporary relief, the legislation (HR 7353) would let all employers, regardless of size, offer excepted-benefit stand-alone telehealth arrangements to all employees, not just those ineligible for benefits.
Mental healthcare. Mental health advocates are optimistic that Congress will include behavioral health reforms in a year-end package, as House and Senate committees have recently made progress on several related bills. A leading proposal in Congress is House-passed bipartisan legislation (HR 7666) that would reauthorize and expand a number of federal programs meant to support behavioral healthcare and workforce training. The bill wouldn’t directly affect private employers’ programs but would require self-funded, nonfederal governmental plans to comply with mental health parity laws. It would also require PBMs to report a wide range of data about their business practices to plan sponsors and the government at least every six months. Reportable data would include how the PBM sets rebates and discounts and what it pays for drugs. Those provisions have bipartisan support and backing from employers and stand a good chance of landing in any final mental health measure this year.
Another House-passed bill (HR 7780) from Democrats has potentially adverse implications for employers but faces headwinds in the Senate. Provisions would boost Department of Labor (DOL) funding for enforcement, expand the ability of DOL and others to sue plans and health insurers for mental health parity violations, and let DOL impose civil monetary penalties for MHPAEA violations. The bill would also ban arbitration clauses, class action waivers, and clauses granting discretion to determine benefits or interpret ERISA plan terms.
Same-sex marriage rights. A push to pass a bill establishing a federal statutory right to same-sex marriage stalled earlier this year but looks set to resume when lawmakers return in November. When the Supreme Court earlier this year ended the federal constitutional right to abortion (Dobbs v. Jackson Women’s Health Org., 142 S. Ct. 2228 (2022)), a concurring opinion by Justice Clarence Thomas suggested that the court should revisit past decisions undergirding same-sex marriage. In response, the House passed a bill (HR 8404) to mandate that states honor out-of-state marriages, regardless of a couple’s sex, race, ethnicity or national origin. The effort hit a roadblock in the Senate, where some Republicans raised religious liberty concerns. But the bill’s supporters, including several GOP senators, are optimistic about winning the 60 votes needed for passage once the election dust has settled and the political pressure on outgoing lawmakers has lifted.
Cap on insulin costs. Senators from both parties are eyeing the lame-duck session for action on capping consumers’ out-of-pocket costs for insulin in the commercial market, though the outlook is uncertain. A bipartisan Senate proposal floated earlier this year would cap consumer copays for insulin in the commercial market at $35 a month and incentivize drugmakers to lower list prices. However, the nonpartisan Congressional Budget Office projects that the bill’s curbs on insurers’ ability to negotiate net prices and potential increased spending on insulin products would raise premiums for Medicare and employer plans, dimming chances for final action this year.
Parity for kidney dialysis benefits relative to other chronic care benefits. Bipartisan House and Senate bills (HR 8594, S 4750) that could see action this year would amend the Medicare secondary payer (MSP) statute to require that employer plans cover kidney dialysis benefits in parity with benefits for other chronic medical conditions. The bills seek to undo the Supreme Court’s holding in Marietta Memorial Hospital Employee Health Benefit Plan v. DaVita Inc. (142 S. Ct. 1968 (2022)). The decision found that a health plan with limited dialysis benefits does not violate the MSP statute if the plan’s terms apply uniformly to all enrollees and don’t vary based on end-stage renal disease or Medicare eligibility or entitlement.
The legislation has triggered a fierce lobbying fight. Plan sponsors argue that legislation requiring parity between kidney failure and other chronic conditions is tantamount to an expensive in-network coverage mandate. Market concentration in the dialysis industry would make that mandate even more costly for plan sponsors. Dialysis providers and patient groups counter that letting the court decision stand will encourage plans to restrict dialysis coverage to cut costs, adding to Medicare’s financial burden. A CBO score of the bills could project major savings for the government, giving supporters of the bills a powerful talking point.
Midterms may elevate GOP agenda but major reforms unlikely
A likely divided government in 2023 means less ability for either party to push through major reforms. Nevertheless, Congress will have an opportunity to act on any bipartisan legislative leftovers from 2022 and find compromise on additional issues. Those issues include encouraging telehealth, enhancing transparency, barring anticompetitive contracting terms between providers and health plans, improving care for mental health and substance use disorders, and updating HSA/HDHP rules to better coexist with direct primary care arrangements and increase the flexibility to offer first-dollar coverage. While both parties support paid leave, the partisan divide in approach makes enactment of a federal mandate unlikely.
If Republicans win control of either/both the House and Senate, their power will be checked by the president’s veto. Overriding a veto requires a two-thirds majority of the Senate, something Republicans won’t have. In any case, the GOP has turned away from trying to repeal/replace the ACA and is not offering detailed healthcare policy plans. House Republicans’ recently released Commitment to America agenda, however, calls for expanded access to telehealth and “lower prices through transparency, choice, and competition.”
If Democrats keep control of both chambers and expand their 50-seat Senate majority, they may try to bring back proposals dropped from the 2021 budget reconciliation proposal, the Build Back Better Act. Those proposals include a federal paid leave entitlement, a lower ACA affordability threshold for employer plans and DOL’s ability to assess civil monetary penalties on employers for mental health parity violations. A major priority, however, would focus on helping the Biden administration implement the IRA’s extensive Medicare drug pricing and Part D reforms.
2023 health and leave benefit planning
This list highlights 10 top compliance-related priorities for planning 2023 health, leave and fringe benefits and recommends general actions for each item. Download the 70-page print-friendly PDF to read the complete coverage.
- Prescription drugs. Watch for federal legislative and regulatory efforts to curb drug and insulin prices and increase access, especially in light of a recent presidential directive. Monitor ongoing state efforts to restrict PBM activities and cap participant cost sharing for insulin and other commonly used drugs. Prepare to comply with a new prescription drug reporting requirement under Section 204 of the No Surprises Act (NSA), part of the 2021 CAA. The interim final rule (IFR) set an initial deadline of Dec. 27, 2022, for the 2020 and 2021 reporting years. Follow the progress of the Federal Trade Commission (FTC) investigation of six major PBMs, whose practices have drawn considerable attention in recent years.
- Group health plan transparency. Prepare to make available the self-service cost comparison tool required under the final transparency-in-coverage (TiC) rule for group health plans and insurers beginning with the plan year that starts on or after Jan. 1, 2023. Confirm that machine-readable files (MRFs) are updated monthly with accurate and complete in-network provider rates and out-of-network allowed payments. When possible, look for analyses of the healthcare prices made public by hospitals since 2021 under the final transparency regulation for hospitals and by third-party administrators (TPAs) and insurers since July 2022. Ensure that the 2021 CAA’s required prescription drug reporting is timely submitted in 2022 and 2023. Watch for more guidance on the remaining transparency requirements — especially the advanced explanations of benefits (EOBs) — and continue good-faith efforts to comply in the interim. Work with vendors to ensure compliance, and update contracts as necessary — most plan sponsors don’t have the required information for the new disclosures. Consider negotiating performance guarantees related to transparency compliance.
- Mental health parity. Continue to comply with the MHPAEA. Ensure that the plan has a written comparative analysis of all nonquantitative treatment limits (NQTLs), as required by the 2021 CAA. Review the plan for NQTLs that have triggered litigation and agency scrutiny. Include assistance with NQTL comparative analyses in requests for proposals (RFPs) and vendor contracts. In 2023, watch for new legislation, guidance and the agencies’ report to Congress, as well as ongoing and emerging parity and behavioral health coverage litigation. Consider MHPAEA parity requirements when improving a group health plan’s medical or surgical benefits.
- COVID-19 pandemic winds down. In anticipation of the COVID-19 PHE and NE ending in 2023, review group health plan terms for COVID-19-related coverage, including testing, vaccines and treatment. Review benefit terms or offerings made under temporary COVID-19 relief laws and guidance. When agency relief during the COVID-19 NE expires, confirm proper winding down of extended deadlines for claims and appeals, special enrollment under the Health Insurance Portability and Accountability Act (HIPAA) and continuation coverage elections and payments under the Consolidated Omnibus Reconciliation Act of 1985 (COBRA). Review federal, state and local COVID-19 guidance on employee health and safety, leave, and workplace nondiscrimination, and review related policies as many of these requirements expire. Monitor federal legislation that could extend COVID-19 testing requirements or telehealth flexibilities.
- Gender and family planning issues in benefits. Assess the health plan impact of the Supreme Court’s Dobbs v. Jackson Women’s Health Organization decision. Employers considering enhanced fertility, adoption and surrogacy benefit programs to support DEI goals and the needs of a diverse workforce should be mindful of compliance issues, including federal tax laws, the ACA and state laws. Review contraceptive coverage to confirm compliance with recent agency guidance. Consider whether federal or state laws require benefit changes for LBGTQ employees and their family members.
- Surprise billing. Confirm plan administrators are complying with the ban on surprise billing for emergency services, air ambulances and certain nonemergency services covered by the NSA. Verify that emergency services are covered to the extent required by the NSA, and plan documents have corresponding updates. Make sure plan documents also contain the necessary cost-sharing information for all services protected by the NSA. Confirm the latest required surprise billing notice is posted on a public website and included with EOBs. Review the frequency and outcomes of independent dispute resolution (IDR) processes. Consider the appropriateness of additional vendor fees related to surprise billing compliance and/or any shared-savings program charges.
- State-mandated paid leave and other state law trends. Review state laws impacting group health and benefit plans. Look for more benefit mandates for fully insured plans. State initiatives will likely include legislative action and agency rule-making on paid family and medical leave (PFML) and paid sick leave, more state restrictions on PBMs for both fully insured and self-funded plans and changes to telehealth laws. Prepare for 2023 reporting obligations. Monitor an ERISA preemption challenge currently pending before the US Supreme Court involving to Seattle’s hotel employee healthcare ordinance and other ERISA-related challenges, particularly to state abortion laws.
- Preventive services. Confirm nongrandfathered group health plans cover all ACA-required in-network preventive services without any deductible, copay or other cost sharing. Modify preventive benefits for the 2023 plan year to reflect new or revised recommendations from the US Preventive Services Task Force (USPSTF), the Health Resources & Services Administration (HRSA), the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC), and ACA guidance. Watch for new COVID-19 preventive services or vaccines, which nongrandfathered health plans must cover without cost sharing on an expedited time frame. Determine the starting age for mandated coverage of breast cancer screening without cost sharing. Ensure coverage of ACA-mandated women’s contraceptives approved by the Food and Drug Administration (FDA), unless the employer has religious or moral objections to contraceptives. Monitor litigation that could spare employer plan sponsors with religious objections from covering preexposure prophylaxis (PrEP) HIV medications and all nongrandfathered group health plans and insurers from covering ACA-mandated USPSTF-recommended preventive services without cost sharing. Track litigation that could require group health plans and insurers to continue covering instruction in fertility awareness-based methods. Update plan documents, summary plan descriptions (SPDs), summaries of benefits and coverage (SBCs), and other materials as needed.
- Other ongoing ACA concerns. Review 2023 group health plan coverage and eligibility terms in light of employer shared-responsibility (ESR) strategy, ESR and minimum essential coverage (MEC) reporting duties, and ACA benefit mandates. Consider the plan impact (if any) now that the “family glitch” for affordable coverage is fixed. Ensure that any rehired retirees are not covered under a “retiree only” plan exempt from many ERISA and ACA requirements. Comply with new obligations under the ACA Section 1557 rules. Continue to calculate and pay the Patient-Centered Outcomes Research Institute (PCORI) fee for self-funded health plans, and prepare for medical loss ratio (MLR) rebates. Monitor ongoing litigation challenging various ACA provisions, including the obligation for nongrandfathered group health plans to cover USPSTF-recommended preventive services without participant cost sharing.
- Health savings account (HSA), health reimbursement arrangement (HRA) and flexible spending account (FSA) developments. For 2023, discontinue changes made by temporary COVID-19 relief, unless extended or made permanent by future legislation or agency guidance. Decide whether to continue (or to adopt) the permanent enhancements to account-based plans under the CARES Act (Pub. L. No. 116-136), the IRA (Pub. L. No. 117-169) and IRS guidance. Amend cafeteria plans under Internal Revenue Code (IRC) Section 125 for changes implementing COVID-19 relief; final amendments for calendar-year plans generally are due by Dec. 31, 2022, but noncalendar plans may have until the last day of the 2022–2023 plan year for certain amendments. Update HDHPs and account-based plans for indexed dollar limits. Identify pre- or no-deductible health benefits, programs or point solutions that could jeopardize an individual’s eligibility for HSA contributions, and confirm strategy. Consider whether pending IRS regulations on individual-coverage HRAs (ICHRAs) or direct primary care arrangements (DPCAs) will impact benefit strategies and compliance efforts. Review future IRS guidance on the definition of a tax dependent for any impact on account-based plans.
Mercer’s Law & Policy US Health team