Skip to main content

HHS Presses on with Regulatory Reforms

News  |  By Christopher Cheney  
   April 03, 2017

With no new healthcare law in place or in sight, President Trump's efforts to recast healthcare reform are in the hands of Tom Price and Seema Verma.

Legislation to repeal, replace, or repair Obamacare has stalled in Congress, but the Trump administration has launched regulatory efforts to transform the federal government's role in the healthcare industry.

Last week, the Department of Health and Human Services published an online summary of the how the Trump administration is crafting its regulatory approach to the Patient Protection and Affordable Care Act until the law can be changed.

"This is the first shot. It may be the only shot, but they are outlining several things that they are going to do with what they consider to be their regulatory power," says Merrill Matthews, PhD, resident scholar at the Irving, TX-based Institute for Policy Innovation.

Providing more flexibility to states in the implementation of reforms and running the Medicaid program are apparently top priorities for Secretary of Health and Human Services Tom Price and Administrator of the Centers for Medicare & Medicaid Services Seema Verma, he says.

"They are going to try to be as flexible as they can possibly be under the law—even to the point where they might get challenged in court."

HHS highlights five regulatory focal points:

  1. Backing state-driven Medicaid reforms, including increased cost-sharing for patients
     
  2. Supporting state innovation such as initiatives designed to strengthen the individual insurance market
     
  3. Allowing patients to keep pre-PPACA health plans without facing penalties
     
  4. Easing insurer preparation for the HIX market in 2018 such as extending health-plan filing deadlines
     
  5. Changing health-plan requirements on the PPACA exchanges to lower premiums such as allowing insurance carriers to offer skimpier coverage and narrower provider networks

The five points suggest that the Trump administration will have a new regulatory approach to fostering the shift from fee-for-service care models to value-based models, Matthews says.

"One of the things [the Obama administration tried] to do is put in guidelines that you have to comply with to show you are doing better care rather than more care, and you get more money if you are doing what the government says you ought to be doing, and less money if you don't."

"That creates a real problem for the medical system because most doctors feel they are providing very good care—the best care that they can provide—without the government telling them they have to do this as opposed to that," he says.

While the Trump administration and GOP members of Congress are unlikely to abandon value-based care models, Price will likely end mandatory participation in new value-based payment programs, says Michael Adelberg, principal at the Minneapolis-based law firm Faegre Baker Daniels.

"In general, Republicans like value-based models and most are happy to see them move forward; but the Secretary's previous comments suggest he doesn't like when providers are forced into these models," Adelberg says.

'Experimenting in Medicaid'
Until President Trump and the GOP-controlled Congress pass new healthcare legislation, Republican zeal to curb costs in the Medicaid program will be channeled through HHS and CMS.

"They will try to give the states a great deal more flexibility in seeking and receiving waivers to federal rules," says Adelberg, who served in leadership roles at CMS for 15 years, working in the Medicare, Medicaid, and PPACA Marketplace programs. The last title he held at CMS was director of insurance programs/acting director of exchange policy and operations.

"You might see changes to Medicaid benefits, you might see increased cost-sharing, you might see work requirements, you might even see deviations in the way Medicaid covers all drugs. There will be an increased interest in experimenting in Medicaid."

Adelberg expects that Price and Verma will allow states to adopt new work requirements and cost-sharing in the Medicaid program.

"Two places where they will likely allow far greater flexibilities than the previous administration are work requirements, which the previous administration was not willing to do, and greater cost-sharing," he says.

"There are a number of Medicaid programs that have nominal cost-sharing, but CMS has been adamantly opposed to more than nominal cost-sharing. You could see far more leniency with respect to cost-sharing."

Indiana's approach to Medicaid Expansion, which Verma designed while working for then-Gov. Mike Pence, should be viewed as the baseline level of Medicaid cost-sharing under the Price and Verma leadership team, Adelberg says.

"Indiana is as far as the Obama administration would go. They may have even had some buyer's remorse afterward, and would not let other states go as far as Indiana. You will likely see states go farther than Indiana under the new administration."

Giving states more flexibility in the Medicaid program is highly likely, says Ellen Meara, PhD. She is a professor and healthcare economist at The Dartmouth Institute for Health Policy and Clinical Practice in Lebanon, NH.

"I would expect them to be friendly to state Medicaid programs seeking waivers to experiment with Medicaid. This would seem especially likely for states choosing to mirror strategies tried in Indiana, where Verma helped to engineer Medicaid enrollee cost sharing for 'extra' benefits like dental benefits, and Arkansas, using Medicaid expansion dollars to purchase private insurance on exchanges," Meara says.

Obamacare at Mercy of Harsh Critics
With the shelving of the American Health Care Act, President Trump and Republicans in Congress failed to legislate Obamacare out of existence, but Price and Verma could easily undermine it.

"There are many ways an ACA demise could be triggered," Meara says.

"Evidence of this comes from the single action to stop advertising during the exchange open enrollment period—this year's enrollment was depressed after being on track compared with prior years. A simple lack of attention to inevitable challenges that can arise on exchanges, or related to enforcement of mandates, or the definition of essential health benefits are all ways to dilute the ACA."

The Trump administration could " blow up" the law's insurance exchanges with little effort, Adelberg says. "The new administration is at an interesting fork in the road."

"There are important matters that are the subject of litigation, such as whether or not HHS should pay the subsidies. There is one more year of transitional reinsurance and billions at issue in risk-corridor lawsuits. Administration decisions can drive the insurers out or they can keep the insurers in. They have not yet tipped their hand on what direction they are going to go."

"These are not slam-dunk decisions for the new administration. These are very hard decisions. They can go against positions taken by the GOP during the Obama administration and seek to preserve the exchange market; or they can go with previous GOP positions and blow up the market, and possibly get blamed."

Christopher Cheney is the CMO editor at HealthLeaders.

Tagged Under:


Get the latest on healthcare leadership in your inbox.