Changes to Come for Health Plans Due to Trump’s Executive Order
On June 24, 2019, President Trump issued the “Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The Order affects the healthcare system at large, but this post focuses on the impacts the Order has on health plans, including the future changes a plan sponsor may have to make to their plans. Although the Order does not require plan sponsors to make any changes to their plans now, they will want to keep a close eye on the guidance the administrative agencies were ordered to issue. We will update this blog post when further guidance is issued.
HDHP/Health Savings Account(HSA): The most immediate call for change requires the IRS to issue guidance within 120 days “to expand the ability of patients to select high-deductible health plans that can be used alongside a health savings account, and that cover low-cost preventive care, before the deductible, for medical care that helps maintain health status for individuals with chronic conditions.” Currently, a high deductible health plan (HDHP) cannot be used in tandem with an HSA if the health plan covers the costs of medical care before the participant reaches his/her deductible, unless those first dollar costs are defined as preventive care. Although some drugs are defined as preventive care (e.g., high-blood pressure medications), many drugs that treat other chronic conditions (e.g., diabetes, HIV/AIDS, Multiple Sclerosis) are defined as maintenance drugs and not as preventive care. The Order calls for an expansion of the list of drugs and other items that a HDHP can cover prior to a participant reaching his/her deducible without eliminating the ability to use an HSA.
Flexible Spending Arrangements(FSA): The Order also calls for the IRS to issue guidance within 180 days “to increase the amount of funds that can carry over without penalty at the end of the year for flexible spending arrangements.” Currently, a participant in a health care FSA can carry over up to $500 of unused funds in his/her FSA from an immediate prior year if the plan sponsor allows it. It is unknown how much the increase may be.
Definition of Medical Care: The Order calls on the IRS to propose regulations to treat expenses related to “certain types of arrangements, potentially including direct primary care arrangements and healthcare sharing ministries, as eligible medical expenses.” If these regulations became final, a participant could use HSA funds on the new list of expenses that the IRS defines as “medical care,” possibly making arrangements such as concierge primary care eligible as covered expenses. Note that this change is less certain and will most likely take longer to implement than the above orders because the IRS is instructed only to issue proposed regulations, and not to issue immediate guidance.
Posting Expected Out-of-Pocket Costs: Finally, the Health and Human Services, Department of Treasury, and Department of Labor were collectively instructed to issue an advance notice of proposed rulemaking within 90 days of the Order to seek “comment on a proposal to require healthcare providers, health insurance issuers, and self-insured group health plans to provide or facilitate access to information about expected out-of-pocket costs for items or services to patients before they receive care.” If this were to become law, group health plans may have to alter their plan administration policies to comply with the new price disclosure requirements. But again, note that this Section of the Order is even further from becoming law because the administrative agencies are only instructed to seek comment on the proposal and not issue any kind of guidance.