Obamacare’s Unforeseen Barriers

Last week, the Department of Health and Human Services (HHS) issued a press release announcing an interim final rule (“IFR”) to ensure “a more seamless transition” into the wonderland that is Obamacare. (The IFR is scheduled to be published on December 17; a pdf version is here.) Per HHS’s press announcement, the rule will, inter alia,

  • Requir[e] insurers to accept payment through December 31 for coverage that will begin January 1, and urging issuers to give consumers additional time to pay their first month’s premium and still have coverage beginning Jan. 1, 2014.
  • Formaliz[e] the previously announced decision giving individuals until December 23, instead of December 15, to sign up for health insurance coverage in the Marketplaces that would begin January 1.
  • Strongly encourage[e] insurers to treat out-of-network providers as in-network to ensure continuity of care for acute episodes or if the provider was listed in their plan’s provider directory as of the date of an enrollee’s enrollment.
  • Strongly encourage[e] insurers to refill prescriptions covered under previous plans during January.

These policies apply to all “qualified health plans” (QHP) sold through an exchange. Translated into plaintext: HHS is requiring insurers to provide coverage for which consumers haven’t paid (full) premiums and is “strongly encouraging” them to provide services that aren’t covered under the policy. All to “smoothly transition to coverage that best fits [consumers’] needs.” Can they do that? I’m pretty sure the answer is “no.”

The first question is whether HHS can issue these regulations at all. I have my doubts. While I haven’t scoured the entire statute, I have found provisions to the effect that insurers need not continue coverage in the event of non-payment or fraud. See, e.g., 42 U.S.C. §300gg-42. That now seems to be inoperative for the period of “seamless transition.” Further, I haven’t found anything to suggest that insurers must cover services that aren’t specified in the policy the consumer purchased. Admittedly the IFR doesn’t say “must,” but it does warn insurers—by way of “encouragement”—that HHS is “considering factoring into the QHP renewal process, as part of the determination regarding whether making a health plan available is in the interest of qualified individuals and qualified employers, … how QHPs ensure continuity of care during transitions.” Translation: if you don’t cooperate, we’ll throw you off the exchanges.

The second question is whether HHS can issue the rule as an IFR—that is, without full notice and comment and with a 30-day delay been the issuance of the rule and its taking effect. The Secretary has general statutory authority to issue IFRs, 42 U.S.C. §300gg-92, and the APA permits the process if the agency “for good cause” finds that notice and comment procedures are “impracticable, unnecessary, or contrary to the public interest” and incorporates a statement of the finding and its reasons in the IFR. 5 U.S.C. 553(b)(B).

Courts have actually been fairly stingy in interpreting this standard, for fear that agencies might use it as an all-purpose vehicle to evade the APA. For example, an agency may not simply back itself up against a statutory deadline, yelp “impracticable!,” and make do without notice and comment. That’s pretty much what happened here, though.

“There have been unforeseen barriers to enrollment on the exchanges,” HHS explains its “good cause.” You don’t say. Further, “[t]he need to provide additional opportunities for consumers to enroll was not clear until a date by which a 30-day comment period and 30-day delay of the effective date would make it impossible to implement” the added “flexibility” for consumers and issuers.

Let’s see: the “unforeseen barriers” are principally a result of HHS’s own fantastic screw-up. And the fact that Heathcare.gov wasn’t going to work was obvious to anyone except, apparently, HHS by October 3 or 4 at the latest—which would have left plenty of time to delay implementation and to crank the necessary rules through notice and comment. Instead, the agency is simply improvising one day at a time, blowing smoke along the way.

It’s probably not worth paying much attention to this particular act of extra-legal creativity. For one thing, you won’t find a plaintiff to challenge the rule in court. For another thing, HHS isn’t remotely done. It “will consider moving the [just-extended] deadline to a later date should exceptional circumstances pose barriers to consumers enrolling on or before December 23, 2013.” The agency says it “does not expect” this. I do.