Trump's nominee to lead the Centers for Medicare & Medicaid Services is scheduled to have her confirmation hearing on Feb. 16.

Feb. 13—Following his recent confirmation, Health and Human Services (HHS) Secretary Tom Price has numerous options for reshaping the Affordable Care Act (ACA).

The Senate voted 52-47 to approve Price’s nomination on Feb. 10.

Price arrived at HHS with numerous pressing issues calling for his attention, including a  package of regulatory changes that aims to prevent a further deterioration of the ACA’s health insurance marketplaces, in which premiums increased by an average of 25 percent in 2017.

Although the details of those regulations have not been released, rules changes to the marketplaces could prove key to Republican efforts to replace the ACA, according to a healthcare policy adviser who is consulting with Congress.

“If that comes out and the insurers say, ‘Hey, we can live with that for a year or two while we work on this other stuff,’ then I think people will start to say, ‘OK, we’re more comfortable with taking our time, as was planned to work out some of the other elements of it,’” Ed Haislmaier, an expert in healthcare policy at the Heritage Foundation, said in an interview.

Price is expected to help lead Republican efforts to repeal and replace the ACA.

Haislmaier is among those urging immediate ACA repeal while replacement legislation is worked out through a series of smaller bills over the next two years. Among repeal approaches he favors is to scale down the ACA’s Medicaid expansion over two years instead of cutting it off abruptly, as a 2016 repeal bill passed by Congress and vetoed by President Obama would have done.

ACA Authority

The ACA gives the HHS secretary enormous power to reshape the law, according to health policy advisers.

“In the minds of Republicans, one of the things they are trying to figure out is what can be done administratively—easily—and then where are the gaps,” said Blair Childs, senior vice president of Premier, who frequently meets with congressional officials. “If you’re talking about health insurance exchanges, what could actually be addressed that doesn’t require congressional action? So it’s going to be a lot of wait-and-see.”

Price will need to figure out what regulatory steps he wants to take regarding the ACA before Congress can determine how to proceed legislatively with repeal-and-replace, Childs said in an interview.

Administrative actions Price could take, according to Larry Levitt, senior vice president of the Kaiser Family Foundation, include waiving the individual mandate penalty using the law’s hardship authority.

Insurers have warned that weakening the individual mandate could cause further deterioration in ACA marketplace enrollments. Enrollment declined in the federal marketplace and some state-run marketplaces during the recently concluded open-enrollment period, which garnered 12.2 million enrollees—or 4 percent less than the 12.7 million who selected coverage during the 2016 period. Some ACA advocates blamed the decline on public confusion over whether the Trump administration would continue to enforce the individual mandate. Levitt noted that it remains unknown how enrollment has fared among individual insurance plans outside the government-run marketplaces, which share the same risk pool.

Price also could continue to defer enforcement of the employer mandate, according to Levitt. The repeatedly delayed mandate requires organizations with 50 or more full-time employees (or equivalent part-timers) to provide ACA-compliant coverage to their full-time workers and meet annual reporting and notification obligations.

To implement changes to the ACA marketplaces, Price could provide greater flexibility for required benefits; tighten rules for special enrollment periods (SEPs), grace periods, and third-party premium payments; and extend allowances for so-called grandmothered plans.

Such modifications would be in step with changes that insurance experts say are needed. For instance, among the immediate fixes needed to stabilize the markets, according to the National Association of Insurance Commissioners (NAIC), are changes to the rules surrounding SEPs, a reduction of the ACA’s 90-day grace period before an insurer can cancel a policy for failure to pay premiums, and leeway for the marketplaces to include plans that don’t cover all essential health benefits.

To keep more insurers from dropping out of the marketplaces and to prevent further rate spikes, federal policymakers need to implement rules changes by the end of March, according to industry experts. The timing requirements stem from state policy-form filing deadlines—generally in May—for insurance plans to be sold next year in the marketplaces.

Medicaid Changes

Price also has the authority to use Section 1332 ACA waivers and pre-ACA Medicaid waivers to provide states with greater flexibility in operating their Medicaid programs.

Hemi Tewarson, program director for the National Governors Association, said the Obama administration interpreted the 1332 waiver “fairly narrowly.” Among state-favored approaches not allowed by the previous administration was the ability to use savings from Medicaid to fund marketplace coverage or vice versa.

“If there were more flexibility in how you could operate 1332, I think more states would be interested,” Tewarson said at a recent Washington, D.C., briefing.

Alaska is finishing a “very narrow” 1332 waiver, and the process has been difficult because HHS never provided a template for states to obtain such a waiver, said Brian Webb, assistant director for Health Policy & Legislation at NAIC.

Price is expected to use his waiver authority to allow states to quickly move their Medicaid programs toward approaches like the Healthy Indiana Plan 2.0. That program requires beneficiaries to contribute to personal accounts that resemble health savings accounts and includes copayments for some services, like emergency department use. However, the program also aims to increase access by providing Medicare-level payment rates. A recently submitted extension of the program would enhance coverage and increase incentives to use the “Gateway to Work” program aimed at encouraging employment searches.

In addition to greater Medicaid flexibility, Tewarson cautioned that states want authorization to continue to use provider taxes as a Medicaid funding stream.

In a related development, Trump's nominee to lead the Centers for Medicare & Medicaid Services, Seema Verma, is scheduled to have a confirmation hearing on Feb. 16.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare 

Publication Date: Monday, February 13, 2017