Last week the Senate passed the Continuing Appropriations Act, 2023 (“CAA23”). The House of Representatives will consider the measure, and President Biden is expected to sign the bipartisan measure into law shortly thereafter. In addition to funding the government for the remainder of fiscal year 2023, the CAA23 includes a host of legislative changes that have direct and indirect impacts on plan sponsors and service providers of group health plans, including an important extension of the HSA-related telehealth relief. Notably, the CAA23 did not include a number of provisions that were discussed prior to its enactment with direct and potentially significant impacts on health care payers, including amendments to the enforcement scheme for the Mental Health Parity and Addiction Equity Act (“MHPAEA”) and expanded dialysis coverage requirements for group health plans and health insurance coverage.

Telehealth Flexibilities

The most direct impact on plan sponsors and health plan service providers is the extension of the HSA telehealth safe harbor that was set to expire on December 31, 2022. Specifically, the safe harbor provides that an HDHP can temporarily cover telehealth and “other remote care services” pre-deductible, and an individual can have stand-alone coverage for telehealth and other remote care services pre-deductible without impacting his/her ability to contribute to an HSA. See our prior alert here. The CAA23 extends the safe harbor for plan years beginning after December 31, 2022 and before January 1, 2025.

GROOM INSIGHT: HDHPs that would like to extend pre-deductible telehealth coverage should review current plan language and determine whether any amendments are needed for a January 1, 2023 effective date.

The extension appears to create a gap for non-calendar year plans because neither the prior safe harbor nor the extended safe harbor will apply to the months of the 2022 plan year that fall in 2023.

Mental Health Enforcement Grants

In addition to providing financial and programmatic support to a host of mental health and substance use disorder programs and providers, the CAA23 amends the Public Health Service Act to create state grants tied to MHPAEA enforcement. The CAA23 authorizes grant making authority of $10 million to CMS for five years for states that apply for such grants and agree to request the nonquantitative treatment limitation (“NQTL”) analysis required under the Consolidated Appropriations Act, 2021.

GROOM INSIGHT: This additional funding to states for MHPAEA enforcement appears designed to ensure further consistency in application of the MHPAEA’s NQTL documentation requirement across states, where health insurance issuers have seen significant variation in the level of scrutiny applied to the same NQTL analysis.

Medicare/Medicaid Changes

While the CAA23 includes a host of amendments to the Medicare and Medicaid programs, a handful are noteworthy for group health plans and health insurance issuers. Among these are:

• Increases in provider reimbursement under Medicare designed to mitigate anticipated provider reimbursement cuts set to become effective January 1, 2023. Providers had faced cuts of roughly 4.5%, which will now be reduced to 2% in 2023 and 3.25% in 2024.

GROOM INSIGHT: While this is applicable only to Medicare fee for service, to the extent group health plans and health insurance issuers base provider reimbursement rates on the underlying Medicare reimbursement rates, these increases could have an impact on plan expenditures and premiums in the future.

These changes could also impact any NQTL analysis regarding provider reimbursement rates under MHPAEA where the stringency of the plan or issuer’s provider reimbursement rates depends on comparisons to Medicare reimbursement.

• The CAA23 mandates a GAO Report on the extent of Medicare’s coverage of benefits for mental health/substance use disorders and medical/surgical conditions.

GROOM INSIGHT: This report appears to be a first step in determining whether and how to apply a MHPAEA-like parity requirement to Medicare benefits, which could materially impact Medicare Advantage Organizations. It could also highlight disparities in Medicare coverage that undermine plans’ and issuers’ arguments regarding the comparability of a number of NQTLs, including the reimbursement rates and the use of prior authorization.

• Imposition of enhanced provider directory requirements for Medicaid Managed Care entities. Under this provision, a variety of risk-bearing entities that contract directly with state Medicaid programs will be required to maintain up-to-date provider directories.

GROOM INSIGHT: This requirement could prove to be administratively burdensome to regulated entities, particularly as provider participation in Medicaid is less common than provider participation in Medicare Parts A and B.

What Didn’t Make It?

Notably, two often-discussed proposals in the run-up to the passage of the CAA23 were the adoption of a more robust enforcement scheme for alleged MHPAEA violations and addressing what some providers view as insufficient reimbursement of dialysis services for group health plan and health insurance coverage enrollees who are eligible for Medicare based on end-stage renal disease.

With respect to MHPAEA enforcement, a number of proposals were discussed, which generally focused on the imposition of civil monetary penalties for violations of MHPAEA and provided enhanced litigation opportunities for plan participants and the Secretary of Labor. While these proposals were not included in the CAA23, we expect them to resurface in the next Congress as CMS and DOL make additional compliance determinations after reviewing hundreds of NQTL analyses submitted under the CAA.

With respect to dialysis benefits, a proposal this summer surfaced to counter the effects of a recent Supreme Court decision, Marietta Mem’l Hosp. Emp. Health Benefit Plan v. DaVita Inc., 213 L. Ed. 2d 376, 142 S. Ct. 1968 (2022), which held that the Medicare Secondary Payer rules do not operate to mandate level of benefit for dialysis services. The proposal sought to amend the Medicare Secondary Payer rules to impose a vague parity standard on plans and issuers with respect to dialysis services and other, non-specified chronic conditions. Despite a great deal of discussion, the measure was not included in the CAA23, but we expect that it will be further discussed and refined in the coming Congress.