HHS Announces Actions to Protect Consumers and Lower Health Care Costs

Today, the U.S. Department of Health and Human Services (HHS), announced actions to protect consumers from junk health plans, surprise medical bills, and excess costs that lead to medical debt. These actions build on the Biden-Harris Administration’s effort to eliminate hidden fees in every sector of the economy and lower health care costs for American seniors and families.

Coinciding with the actions taken today, HHS also released a new report projecting that nearly 19 million seniors will save approximately $400 per year on prescription drug costs when the $2,000 out-of-pocket prescription drug spending cap from the Inflation Reduction Act – President Biden’s historic lower cost prescription drug law – goes into effect in 2025.

The report follows last week’s actions advancing historic provisions in the law that allow Medicare to negotiate prescription drug prices and cap the cost of each Medicare-covered insulin pump at $35 per month.

“The Biden-Harris Administration continues to take action to lower costs for millions of Americans and improve health outcomes across the nation. Today’s announcement protects patients from junk health insurance and unfair billing practices, and increases transparency in our health care system, while continuing to implement President Biden’s historic prescription drug law that is lowering costs for millions of seniors across the country,” said HHS

Secretary Xavier Becerra. “The Biden-Harris Administration is committed to helping seniors and people with disabilities save money on the medications they need and ensuring hardworking families have insurance when they need it.”

“The Biden-Harris Administration’s efforts to make health care more affordable are life-

changing for millions of Americans,” said Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure. “No one should go bankrupt trying to get and keep themself or their family healthy. CMS is committed to a more transparent, fair, and accountable health system for the people we serve. We will continue to clarify consumer rights under the No Surprises Act, work to better understand the impact of medical debt, and limit non-comprehensive junk insurance plans.”

Lowering the Price of Prescription Drugs

HHS released research today on lower out-of-pocket costs resulting from President Biden’s lower cost prescription drug law, which is already saving some seniors and people with disabilities hundreds of dollars annually. According to a new Office of the Assistant Secretary for Planning and Evaluation (ASPE), report, the law’s changes to the Medicare Part D program may reduce out-of-pocket spending by nearly $400 for more than 18.7 million enrollees when the provisions are implemented in 2025, or about one in three people with Medicare Part D. Among this population, the report finds nearly 1.9 million enrollees are projected to save at least $1,000 in 2025. Once all of the provisions modeled in this report are in effect in 2025, they collectively will result in about a $7.4 billion reduction in annual out-of-pocket spending. Today’s report also includes state-by-state projected savings for Medicare enrollees in 2024 and 2025.

Medicare Part D Enrollee Out-Of-Pocket Savings

Projected Impact of Inflation Reduction Act Medicare Part D Redesign for Enrollees Expected to Have Out-Of-Pocket Savings in 2025, by State

Source: ASPE Part D Simulation Model

* Totals include Medicare Part D enrollees residing in territories or areas outside the United States, who are not shown separately.

Protecting Consumers from Junk Plans

Today, HHS and the Departments of Labor and the Treasury issued proposed rules to empower and protect consumers through changes aimed at distinguishing short-term, limited-duration insurance (STLDI) and fixed indemnity insurance (plans that pay a pre- determined fixed amount for a health-related event, regardless of expenses incurred) from comprehensive coverage. STLDI and fixed indemnity insurance sometimes include benefit limitations, and are sold by employing dubious marketing practices, that render such coverage as nothing more than junk. These types of plans are not subject to many of the Affordable Care Act’s (ACA) critical consumer protections, which consumers might not

realize when purchasing them. As a result, individuals may unknowingly end up in plans that do not cover essential benefits like prescription drugs, exclude coverage for pre-existing conditions, or impose annual or lifetime dollar limits on services. Such non-comprehensive coverage can be particularly harmful to low-income individuals and individuals with significant health care needs, as they would face the greatest health and financial consequences from inadequate insurance coverage. The proposed rule, among other policies, would amend the federal definition of STLDI

to ensure these “short-term” plans are truly short-term and used to fill temporary gaps in comprehensive coverage. It would also require STLDI and fixed indemnity excepted benefits coverage to make clearer to consumers the differences between these products and comprehensive coverage, including what is covered and how much is covered.

Improving Transparency and Protections from Unexpected Out-of-Pocket Costs

The Departments also released a frequently asked questions (FAQs) document further clarifying surprise billing and out-of-pocket cost protections for consumers under the No Surprises Act and the ACA, helping to ensure that consumers receive the appropriate protections under these laws. The FAQs also reiterate requirements for plans and issuers to make price information available to consumers, including information on facility fees.

Relatedly, HHS, through ASPE issued the first in a series of reports to Congress on the impact of the No Surprises Act, The report establishes a framework for evaluation of the law’s impact on surprise billing, health care costs, and consolidation that will be used in future reports evaluating the impact of the law.

HHS has joined the Consumer Financial Protection Bureau and Department of the Treasury in issuing a Request for Information (RFI) seeking public comment on the prevalence, nature, and impact of medical credit cards and other medical payment products on consumers and on the health care system. The agencies also seek comment on policy options to address practices by financial companies and health care providers offering these products that result in consumers paying excess costs and that drive up medical debt. This is the first-ever collaboration among the three agencies on the needs of health care consumers.