CMS Flexes its De-Regulatory Muscle

Regulatory action poses the greatest near-term threat to Obamacare and the fastest track to minimizing the federal role in healthcare, three legal and government experts say.

Three recent policy pronouncements show that the Trump administration wants to lighten the federal government's role in the healthcare industry.

Michael Adelberg, principal at the Minneapolis-based law firm Faegre Baker Daniels and a former official at the Centers for Medicare & Medicaid Services, says CMS is signaling a softer regulatory touch.

"It appears that the new leadership wishes to have CMS perceived as a less 'top down' administrator of its programs," Adelberg says.

In a flurry of media releases featuring CMS Administrator Seema Verma, the agency made three policy announcements:

1. On May 15, CMS proposed changes to the Federally-Facilitated Small Business Health Options Program (FF-SHOP), the primary provision of the Patient Protection and Affordable Care Act to foster health coverage at small businesses.
   
   FF-SHOP has not lived up to expectations, with less than 40,000 workers nationwide obtaining coverage through the program, CMS says. The proposed changes include eliminating FF-SHOP enrollment on HealthCare.gov.


2. On May 16, CMS announced a Section 1332 Waiver Check List to ease creation of state-administered high-risk pools, which the Trump administration and Republicans in Congress are championing as an alternative to Medicaid expansion under ACA.
   
   "State-initiated waivers that implement high-risk pool/state-operated reinsurance programs will help lower premiums, stabilize the health insurance exchange, and meet the unique needs of each state," Verma said.


3. On May 17, CMS announced a "streamlined direct enrollment process" for individuals purchasing HIX coverage. The change takes HealthCare.gov out of the enrollment loop for consumers using HIX-approved third party websites such as an insurance carrier portal.
   
   "It is time to get the federal government out of the way and give patients the best tools to make their own healthcare decisions," Verma said.

'Very Aggressive Deregulation'

CMS is embracing the Trump administration's anti-regulatory philosophy, says Earl Pomeroy, who represented North Dakota as a Democratic congressman from 1993 to 2011 and now works as senior counsel at Atlanta-based law firm  Alston & Bird.

"A theme of this new administration is very aggressive deregulation. This theme is in virtually all facets of the executive branch, and you are certainly going to see it at the Department of Health and Human Services as they take on their responsibilities with the Affordable Care Act. They don't like regulations, and they don't like Obamacare," says Pomeroy, a former president of the National Association of Insurance Commissioners.

The recent policy announcements are part of a burgeoning bureaucratic assault on ACA, says Sam Halabi, JD, an associate professor of law at the University of Missouri School of Law.

"Overall, the fundamental goal is to weaken the mechanisms of the Affordable Care Act. No longer allowing small businesses to purchase health coverage on HealthCare.gov effectively makes it more difficult for small businesses to purchase coverage. Several small-business interest groups have said as much," he says.

The prominent role of CMS in crafting key elements of ACA is a major vulnerability for President Obama's hallmark domestic-policy initiative, Halabi says.

"The Obama-era decisions to delay implementation of the ACA and to afford regulatory flexibility where the language of the statute did not seem obvious opened up the law to those same measures being taken by a hostile administration."

CMS is likely to target several other elements of the ACA for regulatory culling, he says. "Pilot programs that were adopted to improve physician transparency, incentives to meet quality and cost benchmarks, and accountable care organizations were creatures of administrative decision-making, and all of them are vulnerable."

Adelberg listed more potential ACA targets for the new leadership at CMS. "The new administration will likely revisit Obama administration regulations that established significant new requirements. Last year's Medicaid managed care regulation and the Office for Civil Rights' non-discrimination regulation are two examples.”

Bureaucratic meddling poses a far greater present danger to ACA than repeal-and-replace legislation in Congress, Halabi says. "All of Congress is now distracted by the White House's non-healthcare-related activities. The American Health Care Act was already going to take a long time in the Senate. Now, it's just going to take longer."