Court Cases

The national uninsured rate in 2022 was 8.4%, down from 9.2% in 2021 and 9.7% in 2020, according to the Centers for Disease Control and Prevention’s National Health Interview Survey. In a May 18 research note, Citi analyst Jason Cassorla noted that the lower uninsured rate is “not surprising” given efforts to make the Affordable Care Act marketplaces more affordable and accessible, such as elongated special enrollment periods and enhanced premium subsidies. Another likely factor is the Medicaid continuous enrollment requirement that was in place until April 1, 2023, due to the COVID-19 public health emergency. Since Medicaid eligibility redeterminations have now resumed, “we would expect upward pressure on the uninsured rate” going forward, Cassorla wrote, but he added that a “partial offset” would come from newly Medicaid-ineligible individuals signing up for ACA marketplace coverage.

In February 2023, the Help Ensure Lower Patient (HELP) Copays Act (H.R. 830), bipartisan federal legislation that would prohibit the use of copay accumulator programs, was reintroduced to Congress. The bill would require health plans and PBMs to count the value of copay assistance that patients receive toward their cost-sharing requirements, and it would apply to individual, small-group and employer-sponsored health plans.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies o­ffer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Another common practice, copay maximizers, takes the total amount of a manufacturer’s copay offset program and divides­ it by 12, making that amount the new monthly copayment on any given drug over the course of a year.

After the Trump administration loosened the regulations governing association health plans — and ignited a court battle that ultimately blocked the new rules — AHPs and their close cousin, multiple employer welfare arrangements (MEWAs), have largely faded from the headlines. However, a recent announcement from the Dept. of Labor (DOL) regarding a MEWA that failed to pay $54 million in health claims shows that the fraud and insolvency issues that have long plagued such plans haven’t gone away.

“My sense is that there are what we call self-funded MEWAs out there that may be kind of operating under the regulatory radar,” says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).

Major pharmaceutical companies are gearing up to file legal challenges to the Medicare price negotiation provisions in the Inflation Reduction Act, Reuters reported. Industry sources who spoke with the news outlet said drugmakers plan to argue that a ban against discussing the price negotiation process violates their First Amendment rights, and that the $1 million per day fine for violations runs afoul of the Eighth Amendment’s protections from excessive fines. Sources also indicated that lawsuits could challenge the legality of initial guidance CMS issued in March regarding the Medicare price negotiation program, as it did not go through a formal process with proposed and final rules. Five of the world’s top drugmakers sent CMS letters raising legal concerns about the Medicare price negotiation program, but they have not yet been made public; CMS said it plans to publish the letters in July when it finalizes its guidance and regulations implementing the program.

In February 2023, the Help Ensure Lower Patient (HELP) Copays Act (H.R. 830), bipartisan federal legislation that would prohibit the use of copay accumulator programs, was reintroduced to Congress. The bill would require health plans and PBMs to count the value of copay assistance that patients receive toward their cost-sharing requirements, and it would apply to individual, small-group and employer-sponsored health plans.

Copay accumulators work by preventing any monetary assistance that pharmaceutical companies o­ffer commercially insured patients from counting toward their deductible or out-of-pocket maximum. Another common practice, copay maximizers, takes the total amount of a manufacturer’s copay offset program and divides­ it by 12, making that amount the new monthly copayment on any given drug over the course of a year.

Recent weeks have brought both good and bad news for insurtechs, with Bright Health Group, Inc. appointing a new chief financial officer, putting its last health insurance asset up for sale, and disclosing that it’s being sued by a provider group for unpaid claims. Clover Health Investments Corp., meanwhile, revealed that it will outsource its core insurance operations to a technology vendor, cut 10% of its workforce, and settle one of a series of shareholder lawsuits filed against the company.

Industry observers tell AIS Health, a division of MMIT, that the net effect of those developments isn’t yet clear, but one thing is certain: The Bright and Clover sagas are far from over.

CMS on April 27 proposed new regulations that would “establish tangible, consistent access standards” in Medicaid as well as create “a consistent way to transparently review and assess Medicaid payment rates across states.” The new policies are included in two notices of proposed rulemaking — the Ensuring Access to Medicaid Services NPRM and the Managed Care Access, Finance, and Quality NPRM. Of note for the managed care industry, the proposed regulations would create national maximum standards for certain appointment wait times for Medicaid or Children’s Health Insurance Program (CHIP) managed care enrollees, CMS said. They would also create stronger state monitoring and reporting requirements related to access and network adequacy for Medicaid or CHIP managed care plans, and require states to conduct “independent secret shopper surveys” of Medicaid or CHIP managed care plans to verify compliance with appointment wait time standards and to identify where provider directories are inaccurate. Among other provisions, the NPRMs would additionally require states to conduct annual enrollee experience surveys for each Medicaid managed care plan, and establish a framework for states to implement a Medicaid or CHIP quality rating system, which CMS calls a “one-stop-shop” for enrollees to compare Medicaid or CHIP managed care plans based on quality of care, access to providers, covered benefits and drugs, cost, and other plan performance indicators.

Clover Health Investments Corp., the Medicare-focused insurtech company, said on April 17 that it plans to cut 10% of its workforce and outsource its “core plan operations” to UST HealthProof’s technology platform. Clover said the initiatives are expected to generate net annual cost savings of approximately $30 million beginning in 2024. The company has yet to turn a profit; it posted a net loss of $136 million in 2020, $587 million in 2021 and $338 million in 2022. In addition to serving roughly 83,000 MA enrollees across multiple states, Clover participates in the program now known as the ACO Realizing Equity, Access, and Community Health (REACH) Model, which allows participants to share risk and receive capitated payments for serving fee-for-service Medicare beneficiaries. However, the company said in November that it planned to scale back that line of business — reducing total attributed lives and revenue managed by its ACO by up to two-thirds — in a bid to get its medical loss ratio below 100%.

On March 30, 2023, Judge Reed O’Connor in the U.S. District Court in the Northern District of Texas issued a ruling in the case, Braidwood Management Inc. v. Becerra, striking down the Affordable Care Act’s coverage requirement for certain preventive services with zero cost sharing. O’Connor ruled that the federal government cannot require health plans to cover services recommended by the U.S. Preventive Services Task Force (USPSTF) on or after March 23, 2010 — such as preexposure prophylaxis for HIV and screenings for HIV, cancers, suicide risk and hepatitis C. The Biden administration has appealed this decision to the Fifth Circuit Court of Appeals.

Since the 2010 passage of the ACA, millions of enrollees have used preventive services. In 2018, six in 10 privately insured people received some preventive care that’s subject to the ACA’s no-cost coverage mandate, with women, children and elderly adults more likely to use such care, according to a study published by the Peterson-KFF Health System Tracker. Another analysis by HHS’s Office of the Assistant Secretary for Planning and Evaluation estimated that about 151.6 million people had access to preventive care without cost sharing in 2020.

On April 18, the U.S. Supreme Court will hear oral arguments in a case that has major implications for government contractors, including health insurers, which are generally subject to a host of complicated regulations and can face federal fraud allegations for knowingly violating those rules.

Major insurer trade group AHIP recently teamed up with the American Hospital Association (AHA) to file an amicus brief arguing that a ruling in favor of the government’s position in two consolidated cases — U.S. ex rel. Schutte v. SuperValu Inc. and U.S. ex rel. Proctor v. Safeway, Inc. — “would create a Wild West of ramifications for any well-intentioned and legitimate hospital or insurance provider that seeks to serve Americans in partnership with the government.”