HRI regulatory center

Regulatory and legislative updates and analysis


President Donald Trump: The latest healthcare developments

HRI Trump administration spotlight: Policy impacts on providers

Republican lawmakers are promoting Medicaid block grants as a way to control federal healthcare spending. Providers can expect a shift from an entitlement to a free market Medicaid approach, along with a possible rise in the uninsured population or decrease in reimbursement.

Read HRI’s spotlight, Medicaid block grants and per capita funding

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HRI Trump administration spotlight: Policy impacts on pharma and life sciences

Tax proposals from the Trump administration could result in pharmaceutical, medical device and medical equipment companies restructuring their supply chains, repatriating overseas capital, and moving manufacturing back to the US. Such reforms, though, pose a sharp deviation from current global operational structures and thus could take years to be fully realized.

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HRI Trump administration spotlight: (Some) change is coming to healthcare

The inaugural festivities are over, the revelers have gone home, and President Donald Trump has moved into the White House. With so much change in the air, what actions can health organizations take today?

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HRI's analysis of the 2016 presidential election results

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.

Read HRI's report, President-elect Donald Trump: Turnaround time

 

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Trump administration highlights – Feb. 13, 2017

Trump administration: Physicians tell senators to protect patient access, new delivery models

The American College of Physicians (ACP) and four other physician groups, representing more than 500,000 doctors and medical students, urged senators to protect newly insured consumers and Medicaid recipients as Congress works to repeal the ACA. In a Capitol Hill meeting, the physician groups asked the lawmakers to keep ACA provisions related to “the ban on lifetime or annual limits on coverage, insurability with pre-existing conditions, maintaining primary care services without out-of-pocket costs and ensuring adequate premium and cost-sharing subsidies to make insurance coverage affordable,” according to an ACP statement. The groups also argued for continued investment in Center for Medicare and Medicaid Innovation (CMMI) delivery models, such as accountable care organizations and patient-centered medical homes.

HRI impact analysis: The physicians’ meeting with lawmakers follows other industry groups’ efforts to ensure their voices are heard as Republicans work on health reform. Many providers have expressed concern that uninsured rates will spike if the ACA’s Medicaid expansion is rolled back and tax credits that help low-income Americans purchase nongroup health insurance are repealed or reduced. Fewer insured consumers could result in decreased use of preventive and disease management services, which could result in excess capacity and decreased revenue. House Republicans are working on a budget reconciliation bill that would repeal parts of the ACA and replace them with more GOP-friendly provisions, though details of that bill have not been released.

Trump administration: Rep. Tom Price sworn in as HHS secretary

On Feb. 10, US Rep. Tom Price was approved by the Senate as HHS secretary and sworn in by Vice President Mike Pence. Secretary Price inherits the challenge of helping craft the Trump administration’s post-ACA regulatory framework. Healthcare industry trade associationspatient advocacy groups and consumers are pressuring the president, Republican lawmakers and the newly minted secretary to maintain key ACA provisions. Shortly after being sworn in, Secretary Price sent HHS staffers a letter stating, in part, that their “efforts will ensure that we advance positive changes to our health care system to improve its affordability, accessibility, quality, and responsiveness.”

HRI impact analysis: Secretary Price is a vocal critic of the ACA. The orthopedic surgeon favors replacing the law with something similar to a bill he has promoted, the Empowering Patients First Act, which includes expanded use of health savings accounts and age-based tax credits to help consumers pay for premiums. Secretary Price will oversee future ACA reforms, including guiding HHS’s efforts to comply with President Trump’s executive order on the ACA. The order calls on agencies to “take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.” Secretary Price also will oversee implementation of the Medicare physician payment reform law, MACRA, and the 21st Century Cures Act, designed to increase medical product innovation and accelerate FDA product approvals.

Trump administration: Court awards Moda Health $214 million in ACA risk corridor back payments

On Feb. 9, a federal claims court judge directed the federal government to pay insurer Moda Health $214 million in unpaid ACA risk corridor program funds. The program — one of the ACA’s 3Rs designed to balance risk for insurers offering ACA exchange plans — failed to pay out the amounts requested by Moda Health and other participating health insurers within the three-year program period, which began in 2014. The federal government owes insurers an estimated $8.3 billion in risk corridor payments for 2014 and 2015, according to Modern Healthcare. Insurers received only 12.6 percent of requested payments for 2014, and have received no payments for 2015. 2016 payments are yet to be determined. The federal government has promised insurers that shortages will be paid from future collections if there is a surplus. However, CMS took in just $362 million in 2014 from more successful plans, while health plans requested nearly $2.9 billion for losses.

HRI impact analysis: At least 17 cases brought by insurers are pending. The government is expected to appeal the Moda decision. The shortfalls in the risk corridor program helped cause 16 of the 23 not-for-profit health insurance co-ops to fail. If insurance companies succeed in court, participating health plans could recoup substantial funds from the federal government. The US Department of Justice, on behalf of HHS and CMS, has maintained that the government need only make payments commensurate with the surplus funds received. The Moda ruling challenges this position by awarding full payment for 2014 and 2015.  

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Trump administration highlights – Feb. 6, 2017

Trump administration: New rule aims to stabilize ACA exchanges

The White House has submitted a rule to the Office of Management and Budget aimed at bringing stability to the ACA’s health insurance exchanges in 2018. Details have not been made public, but early reports suggest it could tighten requirements for enrolling in coverage outside the standard enrollment window, allow insurers to shift more costs onto consumers, reduce consumers’ grace period for failing to pay premiums, and give insurers more leeway to vary premiums based on age.

The rule is set to come as the ACA’s fourth enrollment season drew to a close with 9.2 million people selecting health plans through HealthCare.gov,  slightly lower than last year’s 9.6 million. Enrollment numbers from some of the state-run exchanges are still pending, but it’s unlikely that HHS will reach its goal of signing up 13.8 million people for ACA coverage in 2017.  

HRI impact analysis: Insurers have told lawmakers they need more clarity on exchange rules and assurance that steps will be taken to stabilize the marketplace before they start submitting premium requests for 2018 plans in April. Some insurers have already expressed doubt about participating. The proposals under consideration by the Trump administration are consistent with some of the insurance sector’s suggestions for bringing short-term stability to the market, but it’s unclear whether the measures go far enough to stem an exodus of insurers. For instance, the ACA sets age band requirements at 3 to 1, meaning insurers cannot charge older customers more than three times what they charge younger enrollees. Insurers have said that expanding the band to 5 to 1 would allow them to reduce premiums and attract young, healthy consumers to help balance the costs of sicker enrollees. Smaller tweaks in the age band may not have enough of an impact for insurers.

Trump administration: Some clarity on the two-for-one executive order

memo released by the White House last week provides guidance to government agencies for implementing President Trump’s executive order, Reducing Regulation and Controlling Regulatory Costs,which requires federal agencies to identify two regulations for elimination before introducing a new one. The order also sets a budget for regulations.

The memo answers some questions raised by the order, including which regulations are covered by it and how regulation costs should be calculated. The memo clarifies that the order applies to any “significant regulatory action,” as defined by section 3(f) of Executive Order 12866 issued by President Bill Clinton. This could include any rule that would have an annual effect on the economy of $100 million or more, creates an inconsistency or interferes with an action issued by another agency, or materially alters the budgetary impact of entitlements, grants, user fees or loan programs. The memo states the “opportunity cost to society” as defined under OMB Circular A-4 should be considered when calculating costs and benefits of a proposed rule. Independent government agencies, such as the Social Security Administration, FTC and the Consumer Product Safety Commission, are spared from this order’s requirements, as are spending rules that cause income transfers from taxpayers to beneficiaries, such as rules governing Medicare spending.

HRI impact analysis: The memo gives federal agencies a framework for implementing the executive order. CMS and FDA will have to determine whether a new proposed rule meets the definition of a “significant regulatory action,” and if so, must identify at least two regulations to cut. The agencies also will have to calculate regulations’ costs and create ways to put the two-for-one rule in place, which could slow the process.

Trump administration: Health industry weighs in on executive order on immigration

The US health industry, which employs thousands of immigrants and treats many foreign patients, is awaiting a judicial decision regarding President Trump’s Jan. 27 executive order temporarily suspending entry for residents of seven nations and admissions of refugees. On Feb. 3, a judge in the US District Court for the Western District of Washington issued a nationwide temporary restraining order, effectively lifting the travel and immigration order. The Trump administration is appealing the case. Other legal challenges to the order have been filed, and many observers warn they could last years and perhaps land in the US Supreme Court, according to The New York Times.

HRI impact analysis: President Trump’s executive order, if upheld by the courts, would have widespread implications for the health industry. International medical graduates represent one in four physicians in the US and provide a disproportionate amount of care in rural and low-income communities, according to the American Medical Association (AMA). Patients from overseas arrive each day to seek care in American hospitals. In a letter to US Department of Homeland Security Secretary John Kelly, the AMA urged the federal agency to clarify the order and “mitigate any negative impact on the nation’s health care system.”

New entrants also have voiced concern. On Feb. 5, tech companies with healthcare interests, including Apple, CareZone, Castlight Health and Google, joined more than 100 fellow technology companies in an amicus brief supporting the state of Washington’s legal challenge. The brief asserts that the order “threatens companies’ ability to attract talent, business, and investment” and makes international travel riskier. “That is true even for persons or countries not currently covered by the order because there is no way to know whether a given country may be added to the no-entry list,” the brief states. Health organizations should consider expressing their opinions on the order to trade organizations and lawmakers and begin planning in case it takes effect.

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Trump administration highlights – Jan. 30, 2017

Trump administration: Two-for-one regulatory executive order raises questions

An executive order issued by President Donald Trump this week directs most federal regulatory agencies, including those overseeing healthcare, to identify at least two regulations for elimination before issuing a new one. The order also directs agencies to adopt a regulatory budget and requires that the total cost of new and repealed regulations be “no greater than zero” for fiscal year 2017. Once confirmed, the Director of the Office of Management and Budget will be responsible for enforcing the order. President Trump has nominated Rep. Mick Mulvaney, R-S.C., for that position.

The order did not detail how costs would be defined, measured or calculated, nor did it outline how regulations would be chosen for elimination. The regulatory weeding also will take time; agencies must still follow the time-consuming repeal process. A December 2016 study published by the George Washington University Regulatory Studies Center discusses the pros and cons of how such requirements — which have been adopted in Canada, the United Kingdom and Australia — can be implemented.

HRI impact analysis: The order’s repercussions for the heavily regulated healthcare industry could be significant. Rick Pollack, president and CEO of the American Hospital Association, praised the order: “Excessive red tape not only stands as a barrier to care but as a key driver of cost.” Other health organizations are still reviewing it. Life sciences and other healthcare companies may be particularly affected, as FDA and CMS work to implement recent legislation such as the 21st Century Cures Act and the Medicare Access and CHIP Reauthorization Act of 2015. The reauthorization of the FDA’s user fee programs, which are set to expire in September, may also be affected. Republican lawmakers’ plans for the ACA may depend heavily on writing new regulations, which could become bogged down by the order.

Trump administration: FDA hiring freeze may affect life sciences industry

An executive order signed by President Trump prohibiting the hiring of new staff could negatively affect the life sciences industry. Unlike most federal agencies, the FDA obtains the majority of its budget throughindustry-paid fees, which drug and medical device companies pay when they apply for product approval, among other actions. These fees are used to hire hundreds of review staff. The order did not include an exemption for employees paid by fees. Another memorandum limiting agency communications has apparently stalled previously planned meetings on reauthorizing those same user fee programs.

HRI impact analysis: The hiring freeze could result in slower FDA drug approvals and adoption of reforms resulting from the bipartisan 21st Century Cures Act. Review staff are critical to ensuring that drug and medical device applications are approved within statutory timelines, and delays can cause costly lost productivity for companies. A freeze also prevents the agency from hiring additional staff to create improvements — such as a faster medical device review pathway — meant to benefit companies. Also, stalled meetings may increase the chances that the user fee program may not be reauthorized before the existing authority runs out, which may require a temporary extension or budget cuts.

Trump administration: New bills aimed at shoring up ACA exchanges for now

Four ACA replacement bills designed to stabilize the individual exchange markets were presented this week during a House Energy and Commerce Committee hearing. The replacement bills are intended to comfort insurers wary of participating in the ACA exchanges as the GOP works on repealing the law’s provisions via budget reconciliation. One of the bills would increase the age band ratio established under the ACA to 5-to-1 from 3-to-1, a change insurers would welcome; ACA requirements currently allow charging older Americans only three times as much as they charge younger ones. Another would change the 90-day grace period for missed premium payments to comply with a period established by state law, or set it at 30 days if no state law exists. A third bill would prohibit replacement legislation from including provisions limiting coverage for those with pre-existing conditions. The fourth would require HHS to investigate consumers seeking coverage during special enrollment periods before that coverage can start.

HRI impact analysis: Last week in Philadelphia, the GOP failed to unite around a single ACA replacement plan or strategy. But the four bills, aimed at shoring up the system and preventing its collapse amid uncertainty, could find bipartisan support. Many insurers are beginning to prepare for the spring, when they must submit their 2018 plans for participating in the exchanges. Lawmakers hope such legislation will quell insurers’ fears about participating. A recent letter from the National Association of Insurance Commissioners preaches caution to legislators, reminding them that in some states “the individual market is robust with increased enrollment and premiums have stabilized.” 

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Trump administration highlights - Jan. 23, 2017

Trump administration: Executive order on ACA signals flexibility on key areas

An executive order issued on Inauguration Day by President Donald Trump directs leaders of relevant agencies, such as HHS, to take steps to “waive, defer, grant exemptions from, or delay” provisions within the Affordable Care Act (ACA) that, in officials’ eyes, would “impose a financial burden” on a state, individual or company. The order also calls for agencies to offer more flexibility to states operating healthcare programs, including Medicaid. Any changes will have to be consistent with federal law, including the ACA and the Administrative Procedures Act.

HRI impact analysis: Executive orders cannot change or repeal laws or regulations. They often are used to lay out policy approaches to government agencies, lawmakers, industry and the public. In this case, President Trump is sending a message that he intends to repeal the ACA, with the goals of lessening regulatory and financial burdens and increasing flexibility. Federal agencies that plan to alter ACA regulations will have to do so using the normal notice-and-comment process, which takes a minimum of several months. Still, the order sets the stage for regulatory changes that could affect healthcare organizations. For example, HHS could issue more hardship exemptions to the individual mandate, which could destabilize the ACA insurance exchanges by reducing the number of healthy people seeking coverage. States also could gain easier access to Medicaid waivers under Section 1115 of the ACA, which could allow them to restructure how they pay for certain provider services. Health organizations should begin modeling scenarios to better understand the implications of regulation changes inspired by executive orders.

Trump administration: Lawmakers announce two more ACA replacement plans

Lawmakers floated two more ACA replacement plans this week, bringing the number of potential plans to at least 10. US Sen. Susan Collins, R-Maine, and US Sen. Bill Cassidy, R-La., introduced a plan on Monday that would offer states choices on handling the ACA. The Patient Freedom Act repeals Title I of the ACA, which contains requirements such as the individual and employer mandates, actuarial value requirements and age band requirements, and offers states three options: keep the ACA, adopt a system that auto-enrolls uninsured individuals in basic coverage, or create a new plan. Also this week, Sen. Rand Paul, R-Ky., introduced the Obamacare Replacement Act, which repeals the individual and employer mandates, community rating restrictions, rate review, essential health benefits, the medical loss ratio provision and other ACA provisions. Sen. Paul’s bill includes a two-year open enrollment period for people with pre-existing conditions, features a $5,000 tax credit for contributions to a health savings account, and allows greater flexibility for states to administer Medicaid. All three senators have called for repeal to be accompanied by replacement, without long delays.

HRI impact analysis: As the GOP seeks to coalesce around a single replacement plan, more iterations continue to surface. GOP lawmakers are in Philadelphia this week to discuss their agenda for the next few months, with a focus on the ACA. While potential plans have multiplied, many share common elements, including repealing the individual mandate, increasing use of health savings accounts, offering tax credits to help pay for premiums and other costs based on factors other than income, shifting guaranteed coverage to continuous coverage for pre-existing conditions, and converting Medicaid to a block grant system. Health organizations should ensure their voices are heard as lawmakers work their way toward a plan, and they should evaluate which likely changes will affect them most.

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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.