November 15, 2010 | Comments Off on IMPLEMENTATION PROCESS
Posted by Frank Ciesla
In an earlier blog post entitled “New Era in Healthcare” dated May 1, 2010, I pointed out that a substantial part of PPACA implementation will occur pursuant to the administrative process. With the passage of time, we can see that this will be both a contentious as well as a complex issue which will require much inter-agency coordination, as well as coordination with the states.
A major coordination issue arises since PPACA requires, at the federal level, regulations to be promulgated by at least three different federal agencies. They are the US Department of Health and Human Services/Centers for Medicare and Medicaid Services (“HHS/CMS”), the Department of the Treasury/Internal Revenue Service (“Treasury/IRS”), and the Department of Labor (“DOL”). Other federal agencies, such as the FTC, have stated that they will be issuing safe harbor guidelines, addressing anti-trust issues arising under PPACA.
The administrative rulemaking process has been in existence at both the Federal and State levels for decades. There is nothing unique about this process with regard to PPACA, except for the fact that the legislation left most of the details regarding implementation of legislative intent to the rulemaking process. Historically, an extensive rulemaking process has been used in circumstances where: (1) the implementation of a statute requires significant technical detail and Congress lacks the requisite expertise; (2) the implementation of the legislation requires a level of administrative detail that can best be determined by the agency actually administering the statute; or (3) politics require the use of the administrative process, in those circumstances where setting forth the detail in the legislation may cause the legislative proposal to ultimately fail, since the detail could not be agreed upon by a majority of the members of Congress. The PPACA involves all three reasons for various delegation of rulemaking to administrative agencies. An example of this is PPACA’s delegation to the Internal Revenue Service of the reporting required by the statute of the economic benefits received by employees, in those instances where employers are providing health insurance to their employees. On October 12th this Administration delayed this requirement for a year.
It is reported that the State of Utah is attempting through both the legislative process (Senator Hatch bill), as well as through this regulatory process, by requests for rulemaking, to have the Utah insurance exchange to be deemed compliant with the PPACA.
A state, such as New Jersey, must be prepared to respond to both the PPACA statute as well as to the implementing regulations. As I had pointed out in my prior blog post, it is estimated that there will be over 60,000 pages of Federal Regulations needed to implement PPACA. In response to this issue, legislation has been proposed in the New Jersey Legislature which would appoint a “Commission” to carry out implementation of PPACA. The purpose of the Commission will be to review the regulations and any statutory amendments that are issued at the federal level in order to recommend what State statutes need to be enacted and what regulations need to be proposed and adopted. In New Jersey, there are various agencies that will be involved. These include the Department of Health and Senior Services, the Department of Human Services, the Department of Banking and Insurance and the Department of Labor. There could also be requirements that involve action by the Board of Medical Examiners, the Board of Nursing and the various other professional Boards that are responsible for overseeing different licensed or certified healthcare providers.
We have already seen several instances where the form of regulatory proposals is becoming a contentious issue. A recent New York Times article set forth issues that Senator John D. Rockefeller, IV identified with regard to the administrative process. He was very concerned that when a recent proposed health care reform regulation was published in the Federal Register, nearly one hundred sixty comments were submitted by the insurers who will be subject to the regulations, but only twenty-three comments were submitted by consumer advocates. It does not appear that many (or even any) comments were submitted by the provider community.
The regulatory proposal in question deals with PPACA’s requirement that insurers spend eighty or eighty-five cents out of every dollar they collect in premiums on the welfare of patients (the “medical loss ratio”). The implementation details of the legislation were delegated to the administrative process for ultimate determination. While we have yet to see the final implementing regulations that will ultimately be adopted, those regulations are expected to be voluminous and detailed, and will be the subject of much debate.
The complexity and contentiousness of the proposed medical loss ratio regulations is resulting in requests for a number of waivers that have been submitted by both union and corporate healthcare plans, as well as governmental entities, the impact of which we will discuss in future blog posts.
Another particularly contentious area involves the status of the Administrator of CMS, Donald Berwick. He has not been confirmed and may not be confirmable by the Senate. However, the lion’s share of regulations necessary to implement PPACA will be issued by the Agency that he heads.
It also appears that of the regulatory proposals issued to date, ten have been issued in the form of “interim final rules” which do not include a public comment period. In regard to one of the “final rules”, HHS has sought public input. This development has resulted in a legislative proposal from Senator John Cornyn (R-Texas) that would require the opportunity for public comment on all regulations related to PPACA.