Health Reform WK-EDGE Health and Life Sciences Implications of the Trump Administration
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Tuesday, December 27, 2016

Health and Life Sciences Implications of the Trump Administration

By Wolters Kluwer Health Editorial Staff

With the incoming Donald J. Trump (R) Administration, including single-party control of both Houses of Congress and the White House, there is a possibility of big changes to the Medicare and Medicaid programs, FDA regulation of food, drugs, biologics, and medical devices, and the health care reforms created by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The Trump transition website, greatagain.gov, includes information about the President-elect’s plans for health care and life sciences.

In addition to Trump’s campaign promise to repeal the ACA and replace it "with a solution that includes Health Savings Accounts (HSAs), and returns the historic role in regulating health insurance to the States," the incoming administration listed its health care plans. These include: (1) advancing research and development in health care; (2) reforming the FDA to put greater focus on the need of patients for new and innovative medical products; (3) modernizing Medicare; and (4) maximizing flexibility for states administering Medicaid by enabling innovative method experimentation. There are few details to explain how these goals will be achieved.

This Strategic Perspective analyzes the available documents and statements of the President-elect, his planned appointments for HHS Secretary and CMS Administrator, and House Speaker Paul Ryan’s (R-Wisc) A Better Way plan. It considers possible changes to health coverage, federal health programs, and life sciences law.

Administrative Choices

Trump plans to nominate Rep. Tom Price, M.D. (R-Ga) as HHS Secretary and Seema Verma, who helped craft Indiana’s conservative Medicaid expansion, to lead CMS. Price, an orthopedic surgeon, currently is the chairman of the House Budget Committee and a member of the Health Subcommittee of the House Ways and Means Committee. Price has been a staunch critic of the ACA and was one of the first Republicans to offer a counter to Obama’s landmark health care program in the form of the Empowering Patients First Act.

Verma, a consultant, worked with Pence on Healthy Indiana 2.0, a Medicaid program that requires monthly contributions to HSAs. Verma has worked extensively on a variety of policy and strategic projects involving Medicaid, insurance, and public health, working with various state and federal entities, as well as Sec. 1115 waivers for Medicaid expansion in a number of states.

Potential Health Care Actions

Colin Roskey, partner at Alston & Bird, LLP, and member of the Wolters Kluwer Health Law Advisory Board, identified several potential actions the incoming Congress and Administration could take in repealing rules issued by the Obama Administration:

  • Executive Orders (EOs) can be rescinded, specifically EOs relating to health care, because they are not subject to judicial review.
  • Under the Congressional Review Act, the 114th Congress will likely issue a resolution putting a hold on regulations released 60 days before its adjournment, known as "midnight rules."
  • Republicans may recall sub-regulatory guidance such as frequently asked questions (FAQs), because it is easy to change or ignore such document types.

Stakeholder Views

In a letter to the President-elect, the American Hospital Association (AHA) included a wish list for the new administration. The list requested fewer regulations, a focus on affordability and value (in particular relating to drug prices), streamlining federal quality reporting requirements, ensuring access to health care (especially in regard to children, mental health services, and health benefits for veterans), and continued support for new delivery models, such as accountable care organizations (ACOs), telehealth, and alternative payment systems. The American Medical Association (AMA) expressed its support for Trump’s pick of Price to lead HHS, and announced its plans to "actively engage" the incoming administration on improving health insurance coverage and other health system reforms.

Behavioral Health

Gerald "Jud" E. DeLoss, an Officer in the Health Care Practice Group at Greensfelder, Hemker & Gale, P.C., Chicago office, believes that the new administration may impact behavioral health care legislation and regulation. According to DeLoss, "the Substance Abuse and Mental Health Services Administration (SAMHSA) is currently reviewing proposed modifications to the confidentiality regulations for substance-use disorder (SUD) records," with final regulations expected by the end of 2016. DeLoss noted that such regulations would not "be considered ‘midnight rules’ subject to a Trump administration moratorium. They combine benefits for patients/consumers, providers, and others in the field. As such they will likely remain in place after the new year."

DeLoss is "relatively optimistic" that behavioral health care will continue to be an important focus, and hopes the Trump Administration will continue the current move "toward improvement and integration of behavioral health into the full health care spectrum." He praised CMS’ decision to "roll back the restriction on larger SUD treatment facilities prohibited by the institutions for mental disease (IMD) exclusion," saying it "should dramatically increase the number of beds available for treatment."

Drug and Food Regulations

During the campaign, Trump’s Health Care Reform Plan set the following goal: "Remove barriers to entry into free markets for drug providers that offer safe, reliable and cheaper products. … Though the pharmaceutical industry is in the private sector, drug companies provide a public service. Allowing consumers access to imported, safe, and dependable drugs from overseas will bring more options to consumers."

While the Trump campaign also criticized the FDA’s food industry regulations, post-election there has been no additional information about the President-elect’s plans for food regulations, and it is unknown whether Trump will follow through and direct the FDA to lower the bar when it comes to food safety.

ACA Repeal and Replacement

The goal of repealing and replacing the ACA will not happen immediately upon Trump taking office, according to Roskey. Speaking at the American Health Lawyers Association (AHLA) Institute for Health Plan Counsel in Chicago on December 8, 2016, Roskey said major changes will not occur quickly and Republicans will build in a transition period when replacing ACA provisions. He predicted that any replacement will be delayed to protect both individuals who will be impacted as well as health plans and other businesses.

Roskey added that, although there is pressure to replace the ACA quickly, Congressional committee chairs will moderate the rush for change, allowing the transition to new laws and regulations to occur over an extended period. He believes that the relationship between moderate Republicans, Price, Pence, and Ryan will help win over those in the Republican Party who want to see a faster repeal and replace. He further notes that some current ACA provisions may be redesignated, renamed, or repurposed.

Which Provisions May Stay and Which May Go?

Roskey expects some provisions of the ACA—such as pre-existing condition protection, required coverage of dependent children through age 26, and the continuous coverage provision—will remain part of health care reform. Recent bipartisan legislation that grew out of the ACA, including the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10), also will likely continue.

A core theme of the Republicans, Roskey noted, is to bring certain provisions that were governed by the federal government back to the states, but he added this may not be doable for some of the Republicans’ plans. For example, allowing insurance companies to sell across state lines to increase competition may need more time to put in place.

Other ACA provisions, which are under Republican consideration for changes, include the medical loss ratio and essential health benefits. The future of Medicaid block grants and per capita and the Children’s Health Insurance Program (CHIP) are yet to be determined. When repealing provisions affecting the Medicaid program, Republicans must consider hospitals’ position. Hospitals gave up resources to get coverage expansion and will want more payment coverage if coverage expansion is repealed.

Although there will be an immediate call to repeal the contraception mandate by churches and other individuals, it is not a top priority of the new Administration.

Health Compliance Officers

Roy Snell, CEO of the Health Care Compliance Association (HCCA) noted that regardless of changes to the ACA, the workload of compliance officers won’t change much. "It would take years to change or eliminate enough regulations to make any material difference in the workload of compliance officers," Snell said. "Although there are many regulations, a vast majority of the compliance officers’ risk and workload is connected to billing. Billing is complicated because patient care is complicated, therefore documenting patient care will be always complicated and questioned. That will never change because no administration can simplify patient care. Claims that changes to laws such as the ACA will materially reduce the average health care compliance officers’ workload are [only] made by people who haven’t studied the typical health care compliance officer’s workload."

Medicare Spending

The ACA included many provisions that strengthened Medicare’s financial status for the future. It reduced Medicare Parts A and B payments based on the expectation that coverage increases would lead to fewer uninsured hospital patients, and removed a payment per enrollee discrepancy that paid Medicare Advantage (MA) plans 14 percent more than traditional Medicare. The ACA allowed Medicare beneficiaries to receive certain preventive and screening medical services without cost sharing, and moved to eliminate the "doughnut hole" in Medicare Part D. These changes saved the federal government and Medicare beneficiaries money that, combined with ACA provisions establishing new sources of revenue for the Medicare Trust Funds, extended the predicted solvency of the Medicare program by four years. Repeal of the ACA would undo these changes, leading to increased federal spending on Medicare provider payments and a corresponding rise in beneficiary costs.

Medicaid and Hospitals

The ACA allowed many states to expand their Medicaid enrollment, with the federal government paying for most of the cost of the expansion. Susan A. Benz, partner and co-chair of the Health Care & Human Service Practice Area at Barclay Damon LLP, noted, "Medicaid expansion has provided reimbursement for hospitals for care that was previously uncompensated. The potential loss of the Medicaid reimbursement to providers could result in a substantial increase in bad debt due to uncompensated care and cause financial stress on front-line providers."

Trump and Ryan have both indicated a desire to replace traditional Medicaid with a block grant program. Under such a program, states would receive annual fixed amounts to spend on activities permitted under the terms of the program. As a result, federal funding would become disconnected from the number of Medicaid beneficiaries and the cost of providing care. Under such a program, entitlement to coverage could no longer be guaranteed and states would be obligated to substantially restructure eligibility, payment, and coverage rules.

The Congressional Budget Office (CBO) estimated that recently proposed block grant legislation would reduce federal spending by $1 trillion over 10 years—saving which would result from the denial of coverage to about 14 million people.

Fraud Provisions

Benz said, "It is unclear whether the anti-fraud provisions of the ACA will be repealed. One notable anti-fraud provision is the duty to repay Medicare and Medicaid overpayments within 60 days of identification of the overpayment or it is deemed a ‘false claim.’ This provision has caused considerable anxiety for providers due to the ‘60-day clock’ and the risk of false claims liability which multiplies the damages and imposes substantial penalties on providers." Benz continued, "The repeal of some or all of the ACA is causing instability in the insurance marketplace, anxiety for the 20 million+ individuals who may lose health care coverage, and panic among health care providers who anticipate reduced government reimbursement."

Medical Device Tax

Although policy specifics are scarce, during the campaign, Trump spoke out against the unpopular 2.3 percent medical device tax, passed as part of the ACA. The tax was suspended for 2016 and 2017, but will go back into effect in 2018. A Republican bill (H.R. 160) to repeal the tax passed the House in 2016. The Senate, however, never voted on a companion repeal bill (S.149). In 2017, rather than repeal through a freestanding bill, the medical device tax could be permanently repealed as part of comprehensive tax reform, also a frequent topic of discussion during the campaign.

Conclusion

The single-party control of the Legislative and Executive branches of the United States government and an open seat on what is often considered an evenly divided Supreme Court will lead to big changes in many areas of law. Whether President-elect Trump and Speaker Ryan can follow through on their campaign promises and big policy ideas, most of which are currently lacking in specifics and details, remains to be seen.

Attorneys: Colin Roskey (Alston & Bird, LLP). Gerald "Jud" E. DeLoss (Greensfelder, Hemker & Gale, P.C.). Susan A. Benz (Barclay Damon LLP).

Companies: Health Care Compliance Association; American Health Lawyers Association; American Medical Association; American Hospital Association

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