The Washington Report

December 20, 2023

Note to Subscribers

While we do our best to provide timely updates, it is possible that the information shared in the newsletter may change after our publication deadline.

Holiday Publication Schedule

The Washington Report will be taking a holiday hiatus. Look for your next Washington Report on Wednesday, January 10, 2024. Happy holidays and New Year!

Legislative

House Adjourns for Holiday Recess, Senate Remains in Session This Week
The House has adjourned for its holiday recess. The Senate delayed its recess and is working through this week to discuss foreign aid and appropriation bills before officially adjourning. Both chambers are scheduled to return to the Hill the week of January 8, 2024.

Health

DOL Proposes to Rescind 2018 AHP Rule
On December 19, 2023, the Department of Labor (DOL) announced a proposal rescinding its 2018 rule, “Definition of Employer – Association Health Plans (AHPs).” The 2018 rule expanded the definition of an AHP in a way that would have allowed some individual and small group health insurance coverage to be treated as large group coverage and “evade critical consumer protections under the Affordable Care Act (ACA), which requires coverage of essential health benefits such as emergency and maternity and newborn care. Specifically, the 2018 rule established an alternative set of criteria for determining when a group or association of employers is acting ‘indirectly in the interest of an employer’ under Section 3(5) of the ERISA for purposes of establishing an AHP as a multiple employer group health plan, allowing the AHP to evade ACA consumer protections.”

The 2018 rule’s alternative criteria were set aside by the U.S. District Court for the District of Columbia in a 2019 decision. The district court found the bona fide association and working owner provisions in the rule to be an unreasonable interpretation of ERISA, inconsistent with congressional intent that ERISA applies to employee benefits arising out of employment relationships. The 2018 rule was never fully implemented and the DOL stated it is not aware of any existing AHP formed based on the rule.

The DOL is proposing to rescind in full the 2018 rule to resolve “any uncertainty regarding the status of the standards established under the rule, allow for a reexamination of the criteria for a group or association of employers to be able to sponsor an AHP, and ensure that guidance being provided to the regulated community is in alignment with ERISA’s text, purposes and policies.” Comments on the proposal are due by February 20, 2024.

The news release is available here.

The DOL proposal to rescind the 2018 AHP rule is available here.

The 2019 decision is available here.

IRS Releases Notice on Calculating 2024 QPA
On December 19, 2023, the Internal Revenue Service (IRS) released Notice 2024-01, which provides the indexing factors to be used by group health plans and health insurance issuers to calculate the qualifying payment amount (QPA) for items or services provided on or after January 1, 2024, and before January 1, 2025. The No Surprises Act (NSA) added parallel provisions at Code Sections 9816 and 9817, ERISA Sections 716 and 717, and the Public Health Service Act Sections 2799A-1 and 2799A-2. These provisions provide protections against balance-billing for certain out-of-network items or services provided to patients. The QPA is the basis for determining individual cost-sharing for items and services covered by the balance-billing protections in the NSA, under certain circumstances. The QPA for a given calendar year is based on information regarding median rates for certain items and services from prior years and is indexed based on changes in the consumer price index. In addition to providing the indexing factor for adjusting 2023 amounts for 2024, the Notice also provides cumulative adjustments for prior years and examples of how to apply the percentage increases.

IRS Notice 2024-01 is available here.

Departments Release Final Regulations on Federal IDR Process; Administrative Fee and Certified IDR Entity Fee Ranges
On December 18, 2023, the Departments of Labor, Health and Human Services, and the Treasury (Departments) released final regulations related to the fees established by the NSA for the federal independent dispute resolution (IDR) process, as established by the Consolidated Appropriations Act. These final regulations amend existing regulations to provide that the administrative fee amount charged by the Departments to participate in the federal IDR process, and the ranges for certified IDR entity fees for single and batched determinations, will be set by the Departments through notice and comment rulemaking. The preamble to these final regulations establishes the methodology used to calculate the administrative fee and the considerations used to develop the certified IDR entity fee ranges. These regulations also finalize the amount of the administrative fee and the certified IDR entity fee ranges for disputes initiated on or after the effective date of these regulations. The final regulations become effective on January 22, 2024.

The Federal IDR Process Administrative Fee and Certified IDR Entity Fee Ranges Final Rule Fact Sheet is available here.

The final regulations are available here.

HHS Issues New Report on Medicare Drug Price Negotiation Program; CMS Releases Additional Supplemental Data Resources
On December 14, 2023, the Department of Health and Human Services (HHS) issued a new report (Medicare Drug Price Negotiation Program: Understanding Development and Trends in Utilization and Spending for the Selected Drugs) that provides an in-depth review of the 10 drugs selected for the first cycle of Medicare drug price negotiations under the Inflation Reduction Act (IRA). The report, from the Office of the Assistant Secretary for Planning and Evaluation (ASPE), reviews the common conditions treated by the selected drugs, including key health disparities associated with these conditions. The report explores current utilization and spending trends for each of the 10 drugs over a five-year period.

Also on the same day:

The Centers for Medicare & Medicaid Services (CMS) released a list of 48 prescription drugs for which Part B beneficiary coinsurances may be lower between January 1, 2024 – March 31, 2024, because of the IRA’s inflation rebate provision.
CMS released revised guidance for the Medicare Prescription Drug Inflation Rebate Program detailing key requirements and procedures for invoicing manufacturers that owe rebates to Medicare. Alongside this guidance, CMS also wrote a letter to leading insurers and pharmacy benefit managers (PBMs) encouraging them to ensure adequate payment for and access to vaccines, engage in sustainable and fair practices with all pharmacies, and check their processes and systems to ensure they are providing full coverage, without cost-sharing, for preventive services, among other asks.
ASPE released a Fact Sheet detailing which drugs and biological products met the criteria to trigger a coinsurance adjustment under the IRA’s Medicare Part B inflation rebate provisions for Calendar Year 2023.

Please refer to the news release and various resources for details.

The news release is available here.

The full HHS report, Medicare Drug Price Negotiation Program: Understanding Development and Trends in Utilization and Spending for the Selected Drugs, is part of the ongoing IRA series, and is available here.

The CMS Inflation Rebate Revised Guidance Fact Sheet is available here.

The CMS Reduced Coinsurance for Certain Part B Rebatable Drugs (January 1 – March 31, 2024) Fact Sheet is available here.

CMS Medicare Part B Inflation Rebate Program Revised Guidance is available here.

CMS Medicare Part D Inflation Rebate Program Revised Guidance is available here.

The CMS Letter to Plans and PBMs is available here.

The ASPE Fact Sheet detailing which drugs and biological products met the criteria included in the IRA’s Medicare Part B inflation rebate provisions for Calendar Year 2023 is available here.

Other HR/Employment

IRS Issues Standard Mileage Rates for 2024
On December 14, 2023, the Internal Revenue Service (IRS) released Notice 2024-08, which provides the 2024 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on January 1, 2024, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

67 cents per mile driven for business use, up 1.5 cents from 2023.
21 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, a decrease of 1 cent from 2023.
14 cents per mile driven in service of charitable organizations; the rate is set by statute and remains unchanged from 2023.

These rates apply to electric and hybrid-electric automobiles as well as gasoline and diesel-powered vehicles.