HRI regulatory center

Regulatory and legislative updates and analysis

Trump administration: Latest regulatory and legislative news and analysis

 

Weekly insights from Capitol Hill

Highlights – August 3, 2018

Trump administration expands access to ACA-sidestepping coverage

Insurers will be able to sell short-term insurance plans for up to 12 months, with potential renewals of up to 36 months, under a final rule published this week by the Trump administration. These short-term, limited duration plans are notable because they are exempt from many key Affordable Care Act (ACA) provisions, including requirements that insurance cover certain essential health benefitsissue coverage to all eligible customers, not exclude based on health status and not place lifetime or annual dollar limits on coverage. These plans also are not subject to ACA rules on medical loss ratio, the ratio of premium revenue an insurer spends on medical services and improvement.

With lower premium price tags and slimmer coverage, these short-term plans will increase consumer choice and offer relief from ever-increasing premiums for individuals and small groups looking for coverage, the administration wrote in its final rule. Between 2016 and 2017, average monthly enrollment in the ACA individual markets decreased by 1.3 million people, or 20 percent, for consumers not eligible for tax credits to help them afford their premiums, according to the rule. During that same period, overall enrollment in ACA individual plans decreased by 10 percent and premiums increased by 21 percent.

In comments on the proposed rule, critics said these plans have been associated with fraud and abuse, and that consumers often do not understand what they do and don’t cover. They also worried that they would destabilize the ACA individual market, pulling healthy, young consumers away and driving premiums up. Patient advocacy groups worried that these plans would leave vulnerable patients without needed coverage.

HRI impact analysis: The Congressional Budget Office estimated that the combined effect of the short-term, limited duration and association health plan rules would be to increase premiums in the ACA individual and small group markets by 2 to 3 percent. The administration, in its rule, estimates that in 2019, 600,000 additional people will buy short-term, limited duration plans. By 2028, that increase will total 1.4 million.

Most of these consumers will abandon on-exchange and off-exchange individual markets, according to the administration’s analysis. A small number ─perhaps 200,000 by 2028─ will be Americans who would be uninsured but for these plans. The impact of the exodus in buyers from the ACA exchanges will be an increase in premiums on individual plans of 1 percent in 2019 and 5 percent in 2028, according to the rule.

The impact on the overall healthcare industry likely will be modest. In 10 years, the number of consumers holding short-term, limited duration insurance likely will amount to less than 0.5 percent of the total US population. This number could be smaller still, depending on what states choose to do. States have a lot of latitude to regulate these products and could ban them outright. Already, some state regulators and lawmakers have announced plans to do this. Thus, some providers may eventually see a small swell in patients arriving with skinnier coverage.

More than anything, the new rule represents another modest blow to the ACA markets, which have been rocked by administration decisions over the past year or so. Eventually, the ACA individual market could be comprised mostly of government-subsidized consumers and more affluent ones with serious medical conditions.

Highlights – July 27, 2018

CMS to reinstate risk adjustment transfers

CMS on late Tuesday issued an interim final rule that resumes payments under the risk adjustment program for 2017, ending a short-lived freeze in payments and collections that followed a federal court ruling. The rule reinstates nearly $10.4 billion in transfer payments for 2017 that were expected to be made or received by payers participating in the Affordable Care Act (ACA) exchanges in the coming months. CMS will begin collecting 2017 risk adjustment payments in September and begin issuing payments in October.

HRI impact analysis: Several payers and their industry associations had expressed concern that ceasing the risk adjustment program could cause upheaval in the individual and small group markets and significantly increase premiums in both markets in 2019. For the 2017 benefit year, the absolute value of transfers for the individual market totaled $7.5 billion; the value of transfers for the small group marketed totaled $2.6 billion, according to a report by CMS’ Center for Consumer Information & Insurance Oversight. CMS said in a statement it opted to take immediate action to maintain stability in those markets rather than await a legal resolution to the issue in the courts.

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Payers: Trump administration briefs

Ten states are seeking to change eligibility standards for Medicaid by instituting community engagement components, requiring beneficiaries to maintain regular employment, job seeking, educational enrollment, or community service in order to continue to receive benefits. HRI’s analysis of state waivers found potentially millions of beneficiaries and billions of dollars associated with these requirements.

Read HRI’s regulatory insight: Medicaid work requirements could affect millions of beneficiaries and billions in spending (April 2018)

 

While the Obama administration championed value-based care, the Trump administration has taken a more measured approach, slowing or eliminating some programs while expanding and creating others. Value-based care will continue to drive provider and payer decision-making, though the pace of change is likely to be moderate. The Trump administration is likely to focus on reforms that prioritize voluntary participation and minimize reporting requirements.

Read HRI’s insight: The Trump administration’s slower, more voluntary value-based care (February 2018)

 

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform? (April  2017)

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Providers: Trump administration briefs

Ten states are seeking to change eligibility standards for Medicaid by instituting community engagement components, requiring beneficiaries to maintain regular employment, job seeking, educational enrollment, or community service in order to continue to receive benefits. HRI’s analysis of state waivers found potentially millions of beneficiaries and billions of dollars associated with these requirements.

Read HRI’s regulatory insight: Medicaid work requirements could affect millions of beneficiaries and billions in spending (April 2018)

 

While the Obama administration championed value-based care, the Trump administration has taken a more measured approach, slowing or eliminating some programs while expanding and creating others. Value-based care will continue to drive provider and payer decision-making, though the pace of change is likely to be moderate. The Trump administration is likely to focus on reforms that prioritize voluntary participation and minimize reporting requirements.

Read HRI’s insight: The Trump administration’s slower, more voluntary value-based care (February 2018)

 

The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is transforming the way physicians are paid for Medicare services. But the law also could have profound effects on hospitals and health systems, potentially hitting their bottom lines, changing the way they evaluate consolidation and how they design provider networks. For hospitals and health systems, MACRA is a strategic puzzle to solve, requiring greater enterprise resilience in these times of change and uncertainty.

Read HRI’s spotlight, MACRA is a strategic puzzle that requires greater resilience (September 2017)

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Pharma and life sciences companies: Trump administration briefs

In its first year under the Trump administration, the Food and Drug Administration (FDA) has sharply cut back on the issuance of new regulations and warning letters while approving record-setting numbers of new drugs, generic drugs and drugs for orphan diseases; the FDA has carried on with long-running trends in enforcement, facility inspections, the issuance of guidance documents and policy, and crackdowns on drug quality; and the pharmaceutical industry, the FDA under Gottlieb’s tenure has been predictable, stable and consistent. Learn what this means for 2018.

Read HRI’s insights: Continue to take as prescribed - The FDA under the Trump administration  (February 2018)

 

The pharmaceutical industry is facing a growing threat from safety data on the drugs it produces. The FDA has fostered unprecedented transparency on drug safety data, forcing companies to manage novel challenges from parties already busy mining those data: regulators, the public and data analytics firms. In this climate, pharmaceutical companies have the opportunity to find ways to mitigate risks, unlock savings, make new discoveries and create competitive advantages.

Read HRI’s spotlight: Pharmaceutical companies face the changing future of pharmacovigilance (September 2017)

 

The FDA’s new commissioner, Dr. Scott Gottlieb, has extensively argued that the agency is in need of regulatory reform meant to get critical medical products to patients more quickly and efficiently. Gottlieb’s previous statements signal a greater likelihood of significant change at the FDA, which has been given new authority – both statutory and executive – by legislators and President Donald Trump to streamline and accelerate the way it regulates. As change takes place, life science companies may benefit and find reasons to celebrate – but so, too, will their competitors. 

Read HRI's spotlight, The FDA leans forward: Dr. Scott Gottlieb’s opportunity to reshape the agency (July 2017)

 

After President Donald Trump and Republican leaders canceled a vote on the American Health Care Act (AHCA), the world became more complicated for health industry leaders and their consumers. Amid the multiple unknowns, health leaders may be tempted to wait for clarity. But in this atmosphere, it is even more important for organizations to lean into the unknowns and build resiliency. Healthcare companies can make some “no regrets” moves to build resilience amid periods of change and uncertainty.

Read HRI’s spotlight, What’s next for health reform? (April 2017)

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Health industry strategy: Trump administration briefs

The Tax Cuts and Jobs Act (TCJA) will likely affect the US health industry unevenly; many for-profit organizations will gain billions in tax dollars and repatriated funds, whereas their tax-exempt peers will face increased costs. The law will affect tax-exempt organizations’ executive compensation, employee benefits and unrelated business taxable income. Providers could see an uptick in uninsured patients.

Read HRI’s insight: Tax reform imposes costs on tax-exempt healthcare organizations as for-profit peers weigh benefits (February 2018)

 

Healthcare reform efforts by Congress will create challenges and opportunities that may require changes in operating models across the US healthcare industry. As the legislation undergoes debate and negotiation in Congress, healthcare organizations face considerable uncertainty. Organizations that have developed enterprise resilience—the ability to adapt the business model to change, anticipate disruption and recognize opportunities to generate a competitive advantage—may be best positioned to survive and thrive in these conditions.

Read HRI’s spotlight, Developing enterprise resilience in the face of health reform (March 2017)

 

Months and even years after the winds subside and the floodwaters recede, hospitals and health systems in regions battered by a hurricane will still be dealing with the financial, physical and reputational wreckage caused the storm. Hospitals face closure, chaotic revenue cycle operations, disrupted supply chains, possible credit downgrades, destroyed and damaged physical assets and displaced workforces and patients. Partner institutions, such as long-term care facilities and retail pharmacies, may temporarily, or permanently, operate at diminished capacities. To survive such an event, hospitals and health systems should plan for the complex challenges left in the wake of a hurricane or other natural disaster.

Read HRI 's report, Hospitals and health systems feel the impact of hurricanes long after the floodwaters recede (September 2017)

 

The death of health reform has been greatly exaggerated. Though Congress was unable to pass a comprehensive national health reform bill in 2017, many other reforms are playing out in Congress, regulatory agencies and state capitals that could profoundly impact the healthcare landscape over the next year and beyond. 

These changes include efforts by Congress to reform the federal tax code; by HHS to reshape how the Affordable Care Act (ACA) is administered and how government pays for value over volume; and by states to control Medicaid and drug spending. These efforts make it clear that this is no time for companies to take a relaxed or reactive posture. On the contrary, they should act now to anticipate which changes are most likely to occur and how those changes might affect their business operations, then decide what they’re going to do about it. 

Payers, providers, life sciences companies and employers no longer have just one high-profile reform effort to monitor, but dozens. There are several that require their immediate attention. 

Read HRI and Strategy&'s report, Health reform 3.0: Thriving in a permanent state of policy disruption (November 2017)

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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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Benjamin Isgur
Health Research Institute Leader, PwC US
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Trine K. Tsouderos
HRI Regulatory Center Leader, PwC US
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Alexander Gaffney
Senior Manager, PwC Health Research Institute, PwC US
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Jason Ranville
Senior Manager, PwC Health Research Institute, PwC US
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