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How the Transition from Trump to Biden Will Affect Federal Regulation and Reimbursement

“Meet the new boss. . . same as the old boss.”

The Who’s “Won’t Get Fooled Again” is a rock classic; but as far as U.S. presidents and federal regulation are concerned, the “new boss” is almost never the same as the “old boss.” The typical pattern: The outgoing administration recognizes that its opportunity to impose its political agenda is running out and generates a final spasm of new regulation; the ingoing administration then reviews and in, many cases, revises or cancels those midnight regulations, not only because of its policy differences but also due to the fact that these regulations are typically rushed into effect without following the required notice and comment procedures.

  • And that’s exactly how things are playing out on the healthcare front under the Biden administration. On its very first day in office, the “new boss” issued an Executive Order imposing a freeze on any last-minute regulations finalized by the “old boss” pending further review. Here’s a rundown of what for labs are four key midnight regulatory initiatives affected by the Biden freeze.
  1. Easing of Payor Pre-Authorization Requirements

Initiative: On Jan. 15, CMS issued a final rule requiring Medicaid, the Children’s Health Insurance Plan, Qualified Health Plans and other federal plans (but not Medicare Advantage plans) to:

  • Create application programming interfaces (APIs) on their systems that enable electronic health records (EHR) and other information systems to talk to each other or third-party applications; and
  • Issue prior authorization decisions on urgent requests within 72 hours and non-urgent requests within seven calendar days; and
  • Provide a specific reason for any denials.

Status: CMS hasn’t announced any decisions or timetables. However, it has quietly removed the final rule and associated press releases touting its virtues from its website. In addition to sending a negative signal, the removal of the publication will delay the final rule’s effective date if the administration were to finalize it.

  1. No Penalties for Violating Guidance Documents

Initiative: On Jan. 12, HHS finalized a rule banning the department from imposing penalties on individuals and organizations for failing to comply with a standard or practice that are set forth in a guidance document rather than an official rule or regulation. The rule also requires HHS to follow extensive new procedural rules to carry out civil enforcement actions for potential violations. The rule was purported to take effect immediately.


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Status: A rule intended to advance the Trump agenda of cutting regulation and red tape doesn’t seem likely to survive under Biden. In ordering the freeze, the new president went out of his way to stress that the administration’s policy is “to use available tools to confront” and revoke “harmful policies and directives that threaten to frustrate” the federal government’s ability to confront the nation’s “urgent challenges.” So, while no decisions have yet been made, this rule seems destined for the circular bin.

  1. Medicare Coverage of Breakthrough Devices

Initiative: CMS issued a final rule on Jan. 12 providing for Medicare to cover medical devices that receive “breakthrough” authorization from the FDA for four years, with the potential to make coverage permanent based on clinical evidence and health outcomes among Medicare beneficiaries. The rule, which addresses concerns that the existing Medicare coverage process is too slow and thereby denies beneficiaries access to cutting edge medical technology, was slated to take effect March 15.

Status: It’s hard to predict what the administration will do with this rule, which is just as popular with the device industry as it is loathsome to the insurance industry and patient safety groups. The one thing that is sure is that if the rule does go into effect, it won’t be on March 15.

  1. Official Medicare Coverage Definition of “Reasonable and Necessary”

Initiative: The Trump regulatory change with arguably the widest and most direct impact on labs is the Jan. 14 final rule establishing a definitive definition for CMS to use to determine whether a service or item is “reasonable and necessary” for purposes of Medicare coverage. While it has long been the standard for coverage, the “reasonable and necessary” rule comes not from official regulation but the Medicare Program Integrity Manual. Under the final rule, a service or item would be deemed reasonable and necessary if it’s considered:

  • Safe and effective;
  • Not experimental and investigational;
  • Appropriate for Medicare patients to the extent it’s: A. Furnished in accordance with accepted medical standards for diagnosis and treatment; B. Furnished in an appropriate setting; C. Ordered and provided by qualified personnel; D. Meets, but doesn’t exceed, the patient’s medical need; E. Is at least as beneficial as an existing and available medically appropriate alternative; or. F. Meets criteria to be created by CMS later measuring utilization and coverage of the service or item by commercial insurers.

The new rule was supposed to take effect on March 15.

Status: This one is perhaps the hardest to predict. Totally scuttling the rule might prove unwise given that the healthcare industry has been calling on CMS to adopt a clear and official definition of “reasonable and necessary” for 50 years. However, there are also concerns that the definition in the final rule departs from that of the proposed rule. Moreover, the final rule is a work in progress that will require sub-regulations to flesh out the criteria for commercial insurance coverage comparison (part F. of the bullet listed above). At the end of the day, there’s a good chance that the administration will build on and tweak the work of its predecessor. But when and if a final definition does emerge, it will certainly take effect much later than March 15, 2021.

Other Midnight Trump Regulations on the Chopping Block

Here are some of the other controversial healthcare regulations that were finalized in the last days of the previous administration that have been put on hold as a result of the Jan. 20, 2021 Biden Executive Order:

Medicare Part D Drug Rebates: A controversial rule that would replace the current system of basing rebates on a drug’s list price with fixed administrative fees in a bid to cut drug prices and pharmacy benefit managers’ profits;

Cuts in 340B Drug Discounts: Finalized in December, the rule would require community health centers to pass 340B drug discounts through to their patients;

Oversight of Accrediting Organizations: A rule designed to root out potential conflicts of interest among accrediting organizations that also offer consulting services to clients.

Medicare Outpatient Drug Prices: Defying a federal court ruling, the administration planned to go through with a pilot program to tie Medicare outpatient drug prices to how much foreign countries charge for the particular products.

Coverage of Dialysis Treatments: The rule would have required dialysis centers to tell patients about their coverage options and premium assistance programs.

Medicare Part A Coverage of Social Security Recipients: The administration wanted to change the current rule under which persons age 65 or older automatically apply for Part A coverage when they collect Social Security benefits to allow recipients of retirement benefits to decline Part A coverage.

Price Transparency for Insurers: The flip-side of the hospital transparency rule that would require health insurers and self-insured plans to disclose their in-network and out-of-networks to enable consumers to make better informed choices.

Green Light for Value-Based Drug Pricing: CMS gutted regulations banning private insurers, state Medicaid programs and prescription drug manufacturers from creating value-based payment arrangements tied to clinical outcomes.

Medicare Advantage Payments: CMS’ new Medicare Advantage pay rates included a controversial new payment methodology for adjusting plan payments based on encounter data.

Privatization of ACA Exchanges: In the final days of the administration, CMS issued a rule to increase competition in Affordable Care Exchanges by allowing states to waive certain requirements for their exchanges via Section 1332 waivers and authorize web-based brokers to sell plans.

 

 


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