Executive Order on Health Care Transparency May Impact Employer Sponsored Group Health Plans

Legal Alert

June 27, 2019

executive order photo

Earlier this week, President Trump signed an executive order that directs the Departments of Labor, Treasury, and Health and Human Services (“Departments”) to seek to improve price and quality health care transparency.

The most contentious part of the order requires the Department of Health and Human Services to propose a regulation within 60 days that would require hospitals to publically post standard charge information, including discounted rates negotiated with insurers or network providers, in an easy-to-understand format that will allow patients to compare prices across hospitals.

The order also directs the Departments to take the following action directly related to employer-sponsored group health plans:

Disclosure of Out-of-Pocket Costs. Propose a regulation to require health care 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. Such regulations are intended to protect patients from receiving unexpected expensive bills from out-of-network providers by providing pricing information related to providers and services before medical care is received.
Pre-Deductible Chronic Care Management. Issue guidance to expand the ability of patients to participate in high deductible health plans (“HDHP”) that cover pre-deductible preventive care for the management of chronic conditions (e.g., diabetes) that can be used alongside a health savings account (“HSA”). Under current IRS guidance, an HDHP cannot cover benefits for chronic conditions at 100% until the plan deductible has been satisfied. Under new guidance, it may be possible for HDHPs to provide coverage for such conditions (e.g., medications for diabetes management) without any participant cost-sharing before the plan deductible is satisfied.
Flexible Spending Account Carryovers. Issue guidance to increase the amount of funds that can carry over without penalty at the end of the year for health care flexible spending arrangements (“FSAs”). Under current IRS guidance, health care FSAs may offer carryovers of unused balances of up to $500 remaining at the end of a plan year to be used for qualified medical expenses incurred in the next plan year.

We will continue to provide information about developments under the executive order impacting employer sponsored group health plans in future Client Alerts. If you have any questions in the meantime, please contact your Executive Compensation and Employee Benefits Counsel at Smith, Gambrell & Russell, LLP.