The Biden White House announced a trio of steps aimed at protecting patients from unexpected health care costs on Friday, with new actions surrounding short-term health plans, surprise medical bills and medical debt.

The Department of Health and Human Services’ proposed rule to limit the scope of short-term health plans would unwind a key Trump administration health care push and act on a long-held Democratic priority. The new surprise billing guidelines seek to prevent health care providers and insurers from getting around loopholes in the nascent legislation to ensure patients don’t end up with unexpected costs. And a tri-agency request for information will explore if the use of medical debt credit cards and loans help or hurt patients in the long run.

All of these actions are part of what the Biden administration said are efforts to crack down on hidden fees across the economy.

“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,” Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure said in a statement.

Short-term plans

The new rule proposed Friday by CMS would limit short-term health care plans to three months, with a maximum of four months if extended, rather than the up to three-year short-term plans allowed by the Trump administration. The proposed rule also would prevent these short-term plans from mimicking comprehensive health insurance. The plans are meant to be a temporary bridge, not regular health coverage, the administration said.

Short-term health plans were originally intended to help bridge gaps in insurance coverage for three months or less but in 2018, the Trump administration expanded the plans to up to three years in an attempt to skirt some of the 2010 health care law’s consumer protections and regulations.

A 2020 investigation from Democrats on the House Energy and Commerce Committee found some of the plans’ marketing materials misled customers about what the plans actually covered.

While the short-term plans are less expensive than traditional health insurance, they are not required to have any of the protections enshrined in the Obama administration’s signature health care law and do not have to cover people with preexisting conditions, mental health services or treatment for substance use disorders, or the 10 essential health benefits. 

Nor do they have to have annual out-of-pocket maximums. 

As a result, critics said many Americans who signed up anticipating inexpensive health coverage were left with little coverage and unexpectedly high medical bills. A flurry of litigation followed. 

Since President Joe Biden took office, he has referred to short-term health plans as “junk” insurance and Democratic members of Congress have urged his administration to use its regulatory power to make significant changes to those insurance plans. In his fall 2021 regulatory agenda, Biden said he wanted to get rid of the short-term plans by August 2022, but he did not do so.

In February of this year, Senate Democrats renewed the pressure, with Sen. Tammy Baldwin, D-Wis., leading 34 colleagues in calling on the Biden administration to limit the sale and availability of short-term health plans. 

The senators argued that the Trump-era short-term plans fail to provide comprehensive coverage — particularly concerning as millions of Americans look for new coverage as states begin kicking people off of Medicaid, a practice that was largely prohibited during much of the  COVID-19 public health emergency. As many as 17 million Americans are at risk of losing Medicaid and Children’s Health Insurance Program coverage as states unwind their insurance rosters and will be on the hunt for new, inexpensive health coverage.

“Without additional protections, many Americans could find themselves enrolled in junk plans that do not provide comprehensive coverage or protection for individuals with preexisting conditions,” the senators wrote in the letter to Health and Human Services Secretary Xavier Becerra. 

Surprise billing

The administration has also released new guidance to prevent providers from taking advantage of surprise billing loopholes — specifically ending abuse of the “in-network” designation and the increase of patients being charged for facility fees outside of hospitals. 

The guidance relates to a 2021 law that banned out-of-network surprise medical bills at the beginning of last year. Many lawmakers, providers and insurers argue that the law was not implemented correctly and needs additional administrative oversight.

The guidance is separate from an expected upcoming rule on surprise medical billing from CMS that is expected to amend the independent dispute resolution process.

Currently, some health plans can contract with hospitals and claim those hospitals are not technically in-network. The administration’s guidance makes clear that such a move is prohibited under the surprise billing law, and health services provided by these providers need to either be designated in or out of network.

The guidance also focuses on an increase in patients being charged “facility fees” outside of hospitals, like at a doctor’s office. Such fees are often unexpected and the administration said health plans and providers must warn patients about these add-on fees. The administration also made it clear that providers and emergency rooms can’t get around the surprise billing law by renaming charges as “facility fees.”

Medical debt

The Consumer Financial Protection Bureau, HHS and Treasury Department are collaborating to find out whether medical credit cards and loans lead to higher costs. 

Providers often encourage patients to sign up for such third-party products to help pay for care, but the products can include rates and deferred interest features that lead to higher costs for consumers in the long run. The Biden administration said that providers may encourage these sorts of payment products because they can get paid faster.

The departments will release a request for information to learn more about this emerging practice and get comments about potential policy actions. The request will also question whether these providers are operating outside of existing consumer protections. Once medical bills are placed on medical credit cards, it’s less certain how consumer protections apply. 

Medical payment products were originally used to pay for care not traditionally covered by insurance plans, such as fertility services or cosmetic surgery. But now they are used for a broader set of services, such as expensive emergency room visits. Research from the Consumer Financial Protection Bureau shows providers may be disincentivized to explain legally mandated assistance programs or zero-interest repayment options.

Comments on the request for information must be received within 69 days to be published in the Federal Register.