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How the 21st Century Cures Act will Impact Healthcare Payers

The 21st Century Cures Act includes a provision offering small businesses to adopt health reimbursement arrangements for their employees.

By Vera Gruessner

Last week, the House of Representatives passed the 21st Century Cures Act by 392-26 votes. The 21st Century Cures Act affects the health insurance market through a provision that establishes small business health reimbursement arrangements (HRAs), according to the Employers Council on Flexible Compensation (ECFC).

Health Reimbursement Arrangements

Under this provision, eligible small businesses can offer employees a health reimbursement arrangement that is funded by the employer. Employees would be reimbursed for certain medical spend including monthly health plan premiums.

The absolute maximum that can be offered to employees under the small business health reimbursement arrangement is  $4,950 for individuals or $10,000 for a family plan benefit. Some of the stipulations of establishing the HRA include ensuring the employer is not required to follow the Affordable Care Act’s employer mandate and does not offer a group health plan to their workers.

Employees who are eligible for the small business health reimbursement arrangement must not be eligible for tax subsidies for health plans purchased through the public health insurance exchange during the time they’re covered under their employer’s HRA.

Previously, the Internal Revenue Service and the Department of Labor had found that these arrangements violated certain provisions of the Affordable Care Act. Employers who had previously created these health reimbursement arrangements could have faced a penalty. However, the 21st Century Cures Act would supercede those findings specifically among eligible small employers.

READ MORE: Health Insurance Exchange Consumers Satisfied with Health Plans

Nonetheless, larger employers would still need to align with the recommendations from the Department of Labor and the Internal Revenue Service. The health reimbursement arrangements will be valid for small businesses after December 31, 2016. The next step for the 21st Century Cures Act is for the Senate to decide whether or not to approve the legislation.

Some other changes that the 21st Century Cures Act could bring include requiring the Department of Health & Human Services (HHS) to release Medicare enrollment data including the beneficiaries enrolled in Medicare prescription drug coverage, Medicare fee-for-service, and Medicare Advantage plans. Another provision could require Medicare representatives to include all of the benefit options for beneficiaries in the Medicare eligibility notification packets.

“The 21st Century Cures Act has vital solutions America’s scientists and doctors need to boost access and deliver top-notch care to patients,” Ways and Means Health Subcommittee Chairman Pat Tiberi (R-OH) said in a public statement. “This bipartisan initiative includes two bills I introduced that will provide essential relief medical providers need to treat patients in their own communities.”

While there are potentially beneficial changes for consumers, payers, and employers, the 21st Century Cures Act does have certain controversial positions, according to Health Affairs. In particular, there are some changes to how regulators will be able to analyze the risks and benefits of medical devices.

The legislation would lead to the implementation of a program meant to adopt “real-world evidence” to support new uses for medication. This type of data that doesn’t rely on clinical trials is likely to have less reliability, which may not show the true risks of a prescription drug or the real benefits either.

READ MORE: Patient Wait Times Still High at Veterans Health Administration

The 21st Century Cures Act also includes new methods for approving antibiotics using a “limited population” where the pharmaceutical industry could have more opportunity to promote off-label uses for its medications or other products, which could put patient safety at risk.

“Another concerning provision involves a new ‘limited population’ approval pathway for antibiotics treating patients with unmet needs based on a sliding benefit-risk scale, factoring the severity, rarity, or prevalence of the infection to be treated and the availability of alternative therapies,” Health Affairs reported.

“Manufacturers would be required to affix disclaimers flagging this pathway in the drug’s labeling and to submit promotional materials to the FDA for inspection. But research has shown that consumers rarely read, let alone heed, health disclaimers, and the FDA has been increasingly hampered in its ability to regulate pharmaceutical promotion for unapproved or off-label uses.”

Additionally, the bill would allow high-risk medical devices to have priority review and pave the way for approvals even if there is substantial risk-benefit uncertainty. Looking at past events, quicker review of high-risk medical devices has led to multiple reports of patient safety issues.

These provisions within the 21st Century Cures Act will likely bring new and costly treatments for payers to cover among their member base. Public payers such as Medicaid or Medicare would be left to cover these treatments without much ability to negotiate. However, private payers would be able to negotiate payments and potentially decline to cover more risky medical procedures.

READ MORE: Medicare Part B Drug Prescribing Model Benefits Beneficiaries

Whether or not public and private payers will be affected by these provisions in the 21st Century Cures Act lies with the Senate vote and the US President’s approval.

Dig Deeper:
How Health Insurance Mergers Could Change the Payer Industry

The Progress and Challenges of the Affordable Care Act



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