In April 2021, the Chronic Disease Management Act of 2021 (CDMA) was introduced in the United States Senate (S. 1424) and House of Representatives (HR. 3563). This bipartisan bill builds upon previous versions of CDMA and follows a guidance issued by the US Department of Treasury in 2019 to further increase the flexibility of HSA-HDHPs to cover chronic disease services on pre-deductible basis. The 2020 Kaiser Family Foundation Survey reported that of employers offering an HSA-qualified health plan, 48% of employers with over 5000 employees and 29% of employers with over 200 employees reported implementing a benefit design that expanded pre-deductible coverage.

Smarter Deductibles, Better Value: Expanding Coverage in HSA-HDHPs

High-deductible health plans paired with a tax-free health savings account (HSA-HDHP) represent a growing percentage of plans offered on the individual and group market.  HDHPs have defined minimum deductibles and maximum out-of-pocket limits.  As of 2017, 43% of Americans were enrolled in plans with high deductibles, which represents a nearly threefold increase from 2007.  Employers, in particular, are increasingly offering Health Savings Account-eligible HDHPs (HSA-HDHP), which provide tax-free accounts for employers in conjunction with an HDHP, to expand coverage options, lower their health care spending, and promote proactive consumer engagement.  However, in these plans, enrollees with existing conditions are required to pay out-of-pocket for necessary services prior to meeting the plan deductible, resulting in lower utilization of care, and potentially poorer health outcomes and higher costs.

In July 2019, the U.S. Department of Treasury issued Notice 2019-45 in response to Executive Order 13877.  IRS Notice 2019-45 allows HSA-HDHP plans the flexibility to cover specified medications and services used to treat chronic diseases prior to meeting the plan deductible.  A previous guidance from the IRS allowed HSA-eligible HDHPs the ability to provide select preventive care benefits prior to satisfaction of the plan deductible, but services and medications used to treat chronic conditions were excluded.   Primary prevention, while important, is a small component of overall health spending.  By contrast, spending on chronic disease encompasses 78% of total U.S. health care expenditures

With these policies in place, all high-deductible plans are now able to adopt a more flexible benefit design offering more protection for certain medical services through a value-based insurance design plan structure.  As the market for HSA-eligible HDHPs grows, it is important that these plans use this flexibility to allow for effective health management for all beneficiaries.  A targeted strategy exploring coverage for certain high-value, clinically-indicated health services prior to meeting the deductible will produce more effective clinically-nuanced designs, without fundamentally altering the original intent and spirit of these plans.  Adoption of voluntary, clinically-nuanced expanded HDHP benefit designs has the potential to mitigate cost-related non-adherence, enhance patient-centered outcomes, allow for lower premiums than most PPOs and HMOs, and substantially reduce aggregate health care expenditures.  

Table 1. Chronic Disease Management Services in the Expanded Safe Harbor

Preventive Care Service For Individuals Diagnosed With
Angiotensin Converting Enzyme (ACE) inhibitors
Congestive heart failure, diabetes, and/or coronary artery disease
Anti-resorptive therapy
Osteoporosis and/or osteopenia
Congestive heart failure and/or coronary artery disease
Blood pressure monitor
Inhaled corticosteroids
Insulin and other glucose lowering agents
Retinopathy screening
Peak flow meter
Hemoglobin A1c testing
International Normalized Ratio (INR) testing
Liver disease and/or bleeding disorders
Low-density Lipoprotein (LDL) testing
Heart disease
Selective Serotonin Reuptake Inhibitors (SSRIs)
Heart disease and/or diabetes

Congressional Efforts to Further Expand Pre-Deductible Coverage

Building on the momentum of Executive Order 13877 and IRS Notice 2019-45, Senators John Thune (R-SD) and Tom Carper (D-DE), introduced the Chronic Disease Management Act of 2019 in the Senate (S. 1948), followed by the introduction of the companion bill in the House of Representatives (H.R. 3709) by Representatives Earl Blumenauer (D-OR) and Tom Reed (R-NY).  This bipartisan, bicameral legislation would provide high-deductible health plans the flexibility to provide coverage for services that manage chronic diseases prior to meeting the plan deductible.  The bill was reintroduced in the Senate in January 2020 (S. 3200) and April 2021 (S. 1424) and in the House of Representatives in May 2021 (HR. 3563), building on the IRS guidance and previous versions to further increase pre-deductible coverage for chronic disease management.

Rising health care spending has created serious fiscal challenges that emphasize the need to better engage consumers in their health care decisions.  Smarter deductibles might be a natural evolution of health plans, in that consumer cost-sharing would be reduced for the clinical services that are encouraged under many alternative payment models.  As value-based reimbursement promotes the delivery of evidence-based, high-quality care, consumer-facing initiatives must encourage use—not create barriers—to these high-value services.  Interventions that improve patient-centered outcomes while maintaining affordability are essential, and the clinically-nuanced HDHP would provide millions of Americans a plan option that better meets their clinical and financial needs.  The alignment of clinically nuanced provider-facing and consumer engagement initiatives is a necessary and critical step to reduce health care spending, improve quality of care, and enhance patient experience.

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