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Regulatory and legislative updates and analysis


Trump transition: What emerging developments mean for healthcare

President-elect Donald Trump: Turnaround time

Like a chief executive hired to turn a failing company into a profitable one, president-elect Trump has said he will take an unflinching corporate approach to overhauling the US healthcare system. For an industry that prefers stability to surprises--and one that has worked to adapt to the Affordable Care Act—Trump’s “repeal and replace” agenda may create new uncertainty and opportunity for healthcare leaders.

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Transition highlights – December 5, 2016

Trump transition: AHA asks President-elect Trump for regulatory relief, drug price policies

In a pair of letters, the American Hospital Association (AHA) asked President-elect Donald J. Trump to reduce health systems’ regulatory requirements and address drug prices. The AHA, which represents 5,000 hospitals and health systems, asked the president-elect to cancel Stage 3 of the meaningful use program and suspend the hospital star ratings system, among other requests. Regarding escalating drug prices, the AHA argued for new policies such as allowing drug reimportation, providing mandatory drug rebates, and limiting generic drug “pay-to-delay” deals and patent “evergreening,” both of which delay generic drugs’ availability. With the president-elect expressing support for repealing and replacing the ACA, the AHA also recommended preserving ACA-linked alternative payment models and expanding them to a broader range of clinicians.

HRI impact analysis: A financial impact study released by the AHA and the Federation of American Hospitals found that repealing the ACA without replacing it would cost hospitals $165 billion from 2018 to 2026 and result in massive job losses. Several of the policy recommendations contained in the AHA letter – such as loosening meaningful use requirements and reforming Medicare – also overlap with provisions in the 21st Century Cures Act, pending legislation that the AHA supports. Healthcare organizations should pay close attention to incoming HHS officials and their policy goals. Healthcare associations should send distinct policy ideas to transition leaders to help inform the president-elect’s healthcare policy agenda in 2017.

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Transition highlights – November 28, 2016

Trump transition: Nominees for HHS, CMS named

Early Tuesday morning, President-elect Donald J. Trump announced Rep. Tom Price, R-Ga., as his nominee for HHS secretary. Rep. Price, an orthopedic surgeon, is chairman of the House Committee on the Budget and sits on the House Ways and Means Committee, including its Subcommittee on Health. A vocal Affordable Care Act (ACA) critic, Price developed a bill – the Empowering Patients First Act  – to repeal and replace President Barack Obama’s health reform law. Price’s plan repeals the ACA Medicaid expansion and offers consumers tax credits of $900 to $3,000 a year to help pay for premiums based on age, not income. It also allows insurers to impose pre-existing condition exclusions in some cases, supports high-risk pools with $3 billion in federal funds over three years and allows for insurance sales across state lines with some limitations. The 242-page plan limits health insurance tax breaks for employer-based insurance to $8,000 for individual coverage and $20,000 for family coverage, and it introduces tort reform measures, among other provisions.

On Tuesday, Trump also named Seema Verma as his CMS administrator nominee. Verma is founder and CEO of SVC Inc., an Indianapolis-based health policy consulting firm. She and SVC have expertise in Medicaid reform, including helping to design waiver programs for states such as Indiana, Iowa, Ohio and Kentucky and working on Medicaid projects in Tennessee, Michigan and Maine. Verma was a central figure in helping design Indiana’s Healthy Indiana Plan under then-Gov. Mitch Daniels and, later, Indiana’s Medicaid expansion waiver plan under Gov. Pence, now the Vice President-elect.

HRI impact analysis: Both Rep. Price and Verma have significant experience designing health reform packages that embody conservative goals. Price also understands the legislative tactics required to maneuver any ACA repeal and replace effort through Congress, where Senate Republicans hold too thin a majority to overcome Democrat filibusters. For example, Republican senators could use a budget reconciliation bill to repeal and delay many ACA provisions. In 2015, Price sponsored such a bill, which terminated provisions such as the individual mandate and medical device excise tax immediately but delayed ending measures such as the Medicaid expansion for about two years. That effort was vetoed by President Obama in February, but a similar measure likely would find a more favorable reception from the new administration.

Trump transition: FDA pauses plan to regulate laboratory developed tests

The FDA last week announced that it would no longer pursue a plan to regulate laboratory developed tests (LDTs) until President-elect Trump and the new Congress have a chance to weigh in on the proposal. Currently, CMS – not the FDA – oversees LDTs, which are tests developed within labs for their own use. LDTs differ from in vitro tests in that they arguably do not enter interstate commerce and do not require FDA approval. A guidance proposal released by the agency in 2014 would have subjected high- and moderate-risk LDTs to oversight by the FDA.

HRI impact analysis: The FDA’s decision represents one of the many ways healthcare regulation may be affected during the transition. The decision may be welcome news for the LDT community, which has threatened legal action against the FDA. However, traditional medical device makers may not welcome it;  they have argued that LDTs compete against FDA-approved tests without having to meet the same requirements. Health organizations should identify regulatory proposals that are critical to their plans, and should prepare alternatives in case those proposals are shelved, reversed or delayed during the transition.

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Transition highlights – November 14, 2016

Trump transition: Transition website launched with plans for healthcare

President-elect Donald Trump launched a transition website, www.greatagain.gov, offering new information about his plans for healthcare and a recruitment portal for people wishing to serve in his administration. According to the website, Trump plans to replace the Affordable Care Act (ACA) with a system that includes health savings accounts, high-risk pools and insurance sales across state lines, returning “the historic role in regulating health insurance to the states.” The website also lists proposals to reform the FDA, modernize Medicare, give states more flexibility with Medicaid programs and advance research and development. Some healthcare proposals mentioned by Trump on the campaign trail are missing from www.greatagain.gov, including allowing both the re-importation of drugs from abroad and the negotiation of drug prices by Medicare.

HRI impact analysis: Trump’s transition website states that his administration’s goal “will be to create a patient-centered healthcare system that promotes choice, quality and affordability,” words that echo President Obama’s drive toward value-based care. Trump’s broad message is, generally, one of reduced regulation, more power for the states and a more industry-friendly approach. Pharmaceutical manufacturers, for example, may benefit from Trump’s promise to speed reviews of new products. Trump may focus on eliminating the FDA backlog of generic drug applications, more industry collaboration and greater patient engagement. Insurers and providers face uncertainty around the fate of the ACA. As more details of his policies emerge over the coming months, healthcare organizations should model various scenarios to understand, and prepare for, their potential impacts.

Trump transition: More on fate of ACA

Trump this week said he is willing to keep some parts of the ACA, including provisions prohibiting insurance companies from denying coverage to consumers with pre-existing conditions and allowing children and young adults to stay on their parents’ insurance plans until the age of 26. “I like those very much,” Trump told The Wall Street Journal. He also told the newspaper that Obamacare could be “amended” instead of repealed and replaced. In a separate interview with CBS’ “60 Minutes”, Trump said he intends to have a transition period during which people who purchased insurance on the exchanges will still have coverage, even if the ACA is repealed.

HRI impact analysis: Without Democratic support, Republicans will find it difficult to repeal the ACA. Senate rules permit lawmakers to place holds on legislation using a filibuster, which requires 60 votes to end. Republicans, who hold 51 seats in the Senate, cannot break the filibuster on their own. However, Republican lawmakers could use a process known as budget reconciliation to dismantle parts of the law related to government spending with a simple majority vote. A previous budget reconciliation bill, vetoed by President Obama, called for an almost two-year delay in ending ACA provisions such as Medicaid expansion, premium assistance tax credits and reduced cost-sharing. The bill also called for the immediate elimination of provisions such as the individual mandate and of excise taxes on medical devices and high-cost employer-sponsored health coverage, also known as the “Cadillac tax.” Uncertainty may affect investments in efforts that depend on the ACA, such as certain value-based programs put forth by CMS’ Center for Medicaid and Medicare Innovation. Healthcare organizations will need to track legislative scenarios as they develop and consider their implications on strategy.

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Transition highlights – November 7, 2016

How will Donald Trump’s presidency impact the health industry?

Following his first meeting with Republican leaders as president-elect, Donald Trump confirmed that healthcare will be among his top three priorities. During his campaign, Trump said repealing the six-year-old Affordable Care Act (ACA) would top his agenda during his first 100 days in office. As HRI’s latest report, “President-elect Trump: Turnaround time”, details, Trump also announced other proposals for the $3 trillion US health industry, including expanded use of health savings accounts, cross-state insurance sales, block-granting Medicaid and re-importation of medications. A newly-launched transition websiteadds to that list with endorsements for reviving high-risk insurance pools and reforming the FDA. Many of Trump’s healthcare proposals – such as cross-state insurance sales and turning Medicaid into a block grant program – echo reforms promoted by Republican lawmakers and policy experts for years. Others – such as the re-importation of drugs – are less familiar to his party colleagues.

HRI impact analysis: With Republican control of the House and Senate, Trump will have a shot at significantly impacting the ACA. The industry has spent six years adapting to the complex and comprehensive law, which reduced the number of uninsured by 20 million people and introduced provisions that are popular with the public, such as guaranteed issue, allowing young adults to remain on their parents’ plans until age 26 and filling the Medicare Part D “donut hole.” In its analysis of Trump’s healthcare proposals, HRI concluded that employers, who complained about the administrative costs of implementing the ACA, could find themselves spending money on changing employer policies and data systems to implement laws meant to replace the ACA, or parts of the law. Industry executives also have concerns about repeal or related scenarios, which would mean an end to revenue and tax provisions, including tax credits to offset premium costs. Medicaid expansion in its current form – which has decreased uncompensated care for providers – would presumably be reversed. At the same time, delivery reforms that providers have invested heavily in to accelerate the move toward paying for value could be scaled back.

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About the center

As the US healthcare system continues to undergo transformation, health industries are confronted with an evolving and complicated regulatory environment. With an eye towards how public policy impacts the business of healthcare, the HRI regulatory center serves as a vital resource for executive decision makers who must navigate the changes that lie ahead.

HRI's regulatory center is a group of seasoned professionals that analyze legislative and regulatory policy in Washington and in key states. The group, which focuses on all health sectors, publishes a weekly newsletter and more focused reports that detail the interconnection between Washington and healthcare. The HRI regulatory center calls upon key contacts in government and industry to develop a point of view that is both informative and actionable for health industry leaders.
 

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