The Trump administration's proposed rule to stabilize the individual marketplace could be an effort to beat the clock as insurers decide whether to offer coverage on the marketplaces in 2018.
During a Senate Health, Education, Labor and Pensions Committee hearing Wednesday, witnesses that included representatives from America's Health Insurance Plans, the National Association of Health Underwriters and the National Association of Insurance Commissioners suggested that plans could make decisions about next year by March.
That same day, the Trump administration submitted a proposed rule to the Office of Management and Budget. The exact contents of the rule have yet to be revealed publicly.
But given that the OMB has up to 90 days to review the document, which must then be posted for public comment for at least 30 days, any regulation that would quell the fear of the insurance industry may not come soon enough. In an emergency situation, federal agencies have issued so-called interim final rules with comment, or direct final rules, that become effective immediately upon publication in the Federal Register.
With an interim final rule, the federal agency implementing it stipulates that it will alter the rule if public comments dictate a change.
A recent example was posted by the CMS in December to stop a practice of providers and organizations steering patients eligible for Medicaid or Medicare into private insurance as a way to receive higher reimbursement rates. The agency cited patient safety as the reason for using that expedited regulatory vehicle.
Direct final rules are rare, and there isn't a record of the CMS ever using such a mechanism. This regulatory strategy tends to be used to make routine or uncontroversial changes. For instance, if a rule asked stakeholders to call a hotline in certain instances, but now wants them to email, they could issue a direct final rule.
In these cases, federal agencies will typically issue an effective date, but note that if they receive substantial adverse comment they will issue a withdrawn notice in the Federal Register.
Given the complex nature of health insurance regulation, the rule-making process may be the best way to suggest changes, as it ensures stakeholder feedback.
“In a market situation where going too far, or doing too much in the wrong direction could be worse than doing nothing,” said Sean Moulton, manager of the Open Government Program at the Project on Government Oversight.
An example of a bad policy could be invalidating the individual mandate, but forcing insurers to cover preexisting conditions. That likely would deplete the risk pool of healthy insurers to offset the costs of covering mostly sick people.
Taking public comments from industry stakeholders and citizens also reduces the chances of legal challenges, according to Andrew Emery, president of the Regulatory Group, a consulting firm that helps federal agencies like the HHS develop rules.
Some of the pressing issues for insurers that could not be done through rule-making include the continuation of premium subsidies which would need an appropriations bill. Insurers say the federal subsidies that allow people to buy insurance through the marketplace would help stabilize the risk pool.
Rules, can, however, tighten the requirements for people to enroll during special periods. Currently, insurers say there aren't enough safeguards to prevent people from bilking the system, buying insurance when they need costly medical services and then dropping the coverage.
The fact that the CMS submitted the rule just two weeks after an executive order was released to freeze new regulations from being reviewed for 60 days, does indicate that the Trump administration is taking insurer concerns seriously, Emery said.
Lauren Weiner, president of the management firm Wittenberg Weiner Consulting and former OMB staffer during the Bill Clinton and George W. Bush administrations said that the proposed rule-making review process can go quickly if staffers are directed to expedite. And as of Friday afternoon, OMB has only two rules to review.
“I've turned around major rule makings in a matter of hours,” Weiner said. However, she said usually in those instances, her office either had a draft or some other heads up of what would be in the rule.
