In the waning days of the Trump administration, the Department of Health & Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS), along with other federal agencies, are rushing to propose and finalize various rules before President-elect Biden takes office. Many of these rules will face increased legal jeopardy for lacking standard notice-and-comment rulemaking in some way. Others are likely to be delayed or withdrawn by President Biden.
One of the biggest splashes occurred when the administration finalized the “Most Favored Nation” drug pricing rule. This rule would change how Medicare Part B drugs are paid for and could have significant effects on out-of-pocket spending for people with Medicare and on provider reimbursement. The administration skipped a step in the rulemaking process for this rule, going from an Advance Notice of Proposed Rulemaking to an Interim Final Rule, with no Notice of Proposed Rulemaking in between. The administration claims that drug pricing is too important to delay, but opponents of the rule are likely to point out that they had several years to put out a proposed rule and failed to do so.
At Medicare Rights, we provided comments on the Advance Notice in which we said that we support the goal of reducing costs but that we were concerned that the precise mechanism they selected was untested. We also sought greater transparency and a commitment to ensuring access for beneficiaries. While the details of the rule are not the same as those we commented on, we still have the same access concerns. Importantly, the mechanism of this final rule is even more risky than the original since it will apply nationally.
Another drug pricing rule is the drug rebate rule. This contentious proposal would upend how Medicare Part D pharmacy benefit managers would receive payment for their negotiations with pharmaceutical manufacturers. When it was proposed, Medicare Rights expressed concern that the rule did not guarantee any benefit for people with Medicare and was likely to raise both Part D premiums and programmatic spending. Our comments also emphasized the need to exclude Medicaid from this conversation. In an added wrinkle, the administration announced in 2019 that they had withdrawn this rule. Traditionally, that would mean they had to start from scratch, not finalize the rule. Opponents are likely to try to stop the rule through litigation or through the Biden administration.
Other rules are less likely to garner significant pushback. For example, the administration’s HHS Office of the Inspector General finalized a new rule to clarify certain types of conflict of interest involving referrals for providers. When Medicare Rights commented on the proposal, we were largely supportive. Similarly, CMS finalized a different rule around conflicts of interest, commonly called the “Stark Law” rules. These rules are less controversial than the drug pricing rules above.
HHS recently proposed a new rule, the SUNSET rule, that would require any administration to assess and review all regulations periodically. If they do not do this required assessment, the rules will expire. This rule would cause widespread confusion and uncertainty for payers, providers, and patients, and it is almost certain to lead to litigation if it is not rescinded by the incoming Biden administration.
Similarly, a new Affordable Care Act Marketplace proposed rule would allow states to exit from HealthCare.gov without setting up a replacement. This leaves residents of those states only able to use private brokers and insurers to gain coverage. This rule goes one step further than the Georgia waiver we discussed in November by allowing states to exit the Marketplace without going through the steps of applying for a waiver. Perhaps most importantly, the rule would also slash Marketplace user fees which would cut into funding available for enrollment outreach. In addition to the controversy of the rule itself, the administration is using an unusually short comment period, which is likely to spawn litigation.
It is clear that the Trump administration is not done using its rulemaking authority, but regulations that are finalized so close to a new administration entering office are always likely to face heightened legal challenges. That makes it ever more important for administrations to follow all procedures to avoid courts throwing out the rules in their entirety. We will continue to monitor the ultimate fate of each of these rules.
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