Any presidential transition is exciting for federal regulatory attorneys as new agency policymakers potentially take regulatory law down new or different paths. Given the prominent role of health-care issues during the pandemic and presidential campaign, it is useful to understand the tools available immediately to a new Biden administration to shape regulatory policy.
These tools can complement the traditional notice-and–comment rulemaking that can take months or years to complete, and will give important policy signals to providers, manufacturers, suppliers, health plans, consumers, and other interested parties.
Repealing or Revising Executive Orders
Although executive orders have the force of law if issued under a valid claim of constitutional or statutory authority, unlike statutes or regulations they can be revoked or modified at any time. Most contemporary health-care EOs do not alter regulations themselves, but direct agencies in their application or enforcement of regulations.
President Trump issued several health-care EOs directing actions to be taken by the secretary of HHS: reforming Medicare through “market-based approaches” (October 2019); drug importation and ending drug rebates (July 2020); “most-favored-nation prices” for Medicare Part B drugs (September 2020); and the Medicare Hospital Compare website (September 2020). These EOs will likely be repealed or revised in January or February to allow the Biden administration more latitude to set its own policy.
Challenges to Final Regulations
Several Trump health-care regulations are or soon will be challenged by stakeholders in court. The Biden administration may instruct agencies not to defend individual regulations. The Department of Justice can agree or decline to do so, or may request that the court remand the matter to the agency for further review.
For example, it will be interesting to see whether the Biden administration will defend the Trump Medicare transparency regulations requiring hospitals to disclose their charges as well as their payer-specific, privately negotiated reimbursement rates.
As the Biden administration’s regulatory agenda unfolds, this may set the stage for challengers to seek revisions or a reversal of the administrative law principle known as “Chevron deference,” under which courts generally defer to reasonable agency interpretations of the statutes that they administer.
Reversing Chevron would make it easier to challenge a regulation, and there is support for further weakening or abandoning Chevron among some in the legal community.
Suspending and Review of Pending Regulations
Since 2001, one of the first acts of an incoming administration has been to direct executive departments and agencies to suspend all proposed and final regulations that have not been published in the Federal Register, and to extend the effective date of any published final regulations that have yet to take effect.
The purpose of the suspension is to allow the new agency leadership to review the law and policy issues, and, where appropriate, to consider further actions including withdrawing regulations or reopening the comment period for pending regulations.
The Biden administration will likely do the same, and permit exceptions for regulations that address emergencies or other urgent circumstances such as the Covid-19 pandemic, and for regulations that must be published to meet statutory deadlines.
Some of the Trump administration’s novel health regulations, which are undergoing final OMB review now, will receive particular scrutiny by the new administration. These include the administrative dispute resolution for the 340B program, ending the current anti-kickback statute (AKS) safe harbor for prescription drug rebates, “most-favored-nation prices,” Medicare Advantage changes for the 2022 plan year, and revisions to the AKS and physician self-referral regulations to facilitate coordinated care.
An extreme means of changing regulatory direction is the Congressional Review Act (CRA), under which Congress has 60 days following the release of an economically significant final rule to rescind the rule permanently through a simple majority vote.
This means that any economically significant Trump administration regulation finalized after Nov. 20, 2020, is vulnerable to a CRA rescission vote by the 117th Congress that would then be signed into law by President Biden.
Other Areas of Interest
Apart from the immediate-term actions described above, the Biden administration, like others before it, may take up to a year or more before advancing substantive new rulemaking on anything other than routine issues or required annual Medicare payment rules.
It can take that long to fully staff an agency with the leadership, policy experts, and lawyers to participate in a thorough, deliberative rule drafting process with career agency staff. Enhancements to the ACA exchanges will be a priority, along with scrutiny of short-term, limited duration health plans.
The Medicare program has proposed several interesting changes to drug and device coverage and classification, and the Biden campaign did not take a public position on those proposals. These include the CMS proposals to create an expedited path to Medicare coverage for FDA-designated “breakthrough” devices,to determine products to be “reasonable and necessary” for Medicare reimbursement if they are covered by commercial insurance, and to codify a process for the assignment of HCPCS codes and benefit category determinations.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Philo D. Hall is a senior counsel in the Health Care and Life Sciences practice in Epstein Becker Green’s Washington, D.C., office. Drawing upon nearly 12 years of experience in a series of federal government health policy positions, he brings insight into the legal, policy, budgetary, and political factors influencing federal agency decision making.
Robert E. Wanerman is a member of the firm in the Health Care and Life Sciences practice, in the Washington, D.C., office of Epstein Becker Green. His practice concentrates on regulatory, reimbursement, and compliance matters affecting health-care manufacturers, service providers, and investors in health-care organizations.