The Regulatory Toolbox: Five Ways the Administration Can Change Health Care Without Congress
(By Mara Baer, Founder & President, AgoHealth)
The dust has started to settle since President Trump’s inauguration and a new unified government has begun its work to dismantle the ACA as we have known it. The path towards “repeal and replace” began with instructions from Congressional budget leaders, directing key health committees to design the specifics of repeal. Repeal will not be wholesale, but chip away at several building blocks of the law (see DMSG December Washington Report for details).
Republicans have not yet coalesced around a reform strategy but in the interim stakeholders should expect the Administration to exert its authority to the extent possible. The Obama Administration did so with ACA implementation and was often highly criticized for those actions. Now Republicans have their turn at the head of the regulatory table and will leverage these processes broadly.
The regulatory structure is a powerful tool in health care and several procedures will guide the actions of new political leaders at the Departments of Health and Human Services, Labor, and Treasury which all have jurisdiction over ACA programs. Their likely short-term goals will be to try and address rising premiums, prevent a dismantling of the individual market, and create more flexibility for payers, employers and states. Five tools the Administration will leverage towards these goals include:
- Issuing New Proposed Regulations. While the most burdensome of regulatory tools, the new Administration may opt to add new ACA regulatory requirements to redefine the law within the confines of statute. New proposed rules require a full notice of rulemaking and public comment period. All rules must be reviewed and approved by the President’s Office of Management and Budget (OMB), adding a layer of scrutiny. Just last week OMB announced that a new ACA rule is under review. While the details are not yet available some industry experts anticipate this rule will attempt to stabilize the individual market for 2018, providing greater certainty to insurers who are currently developing products and rates.
- Amending Existing Regulations. Like issuing a new proposed rule, the Administration can modify a final rule that was put in place previously. This option also requires full notice of rulemaking and a public comment period and will be required to make significant changes to the ACA short of legislation. For example, changing the framework for essential health benefits would likely require amending existing regulation. Amending regulations may also be used to reduce many administrative and reporting burdens insurers have said are contributing to premium increases. Beyond the ACA, a 2016 final rule impacting Medicaid managed care plans may also be amended to ease rules including medical loss ratio and network adequacy requirements.
- Issuing/Modifying Sub-Regulatory Guidance. Once CMS’ new leadership is in place, the agency will likely move quickly to use guidance documents to clarify the Administration’s interpretation of existing regulations. This does not require a public notice and comment period so it can proceed more quickly through the regulatory process. Guidance documents are generally a vehicle for an agency to define expectations or standards for compliance and may take the form of letters, FAQs or other communications. For example, the new Administration may use this tool to relax preventive services guidelines or other benefit mandates. CMS may also give new directives to state Medicaid directors through guidance.
- Non-Enforcement. During the early days of ACA implementation the Obama Administration took a non-enforcement approach to the employer mandate, delaying penalties to allow employers extra time to prepare for reporting requirements. The Trump Administration is likely to leverage a similar strategy for employers and even forgo penalties for non-compliance with the individual mandate. Non-enforcement may also be used to help reduce premiums by relaxing compliance rules for ACA taxes on employers and insurers.
- Use Waiver Authority. While some waiver changes may require new rulemaking or sub-regulatory guidance, it all but certain that 1115 and 1332 waivers will be used to allow states more flexibility to change Medicaid and ACA programs. Some states may opt to apply for limited waivers to make targeted changes while others may be considering broader waiver requests. Some Republican governors are hoping CMS will permit joint 1115/1332 waivers so they can develop solutions that combine markets. Other states are awaiting guidance that would allow states to impose new work requirements for Medicaid, something the Obama Administration denied in prior 1115 waiver applications.
These are just a few of the strategies to expect from the new Administration’s leadership as it begins its work. Policy experts across health care sectors are developing proposed modifications to ACA rules and regulations now in anticipation of leadership that is open to significant changes. Health care businesses and other stakeholders should not sigh any relief that the clock has slowed in Congress because the countdown to action at the White House continues.
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