Episode 5

Transcript

Mike Smith: Welcome to another episode of Frantz Ward's podcast series, Shoveling Smoke. I'm Mike Smith, a partner at Frantz Ward, and your host for today's podcast. As you heard in the last podcast with Chris Koehler and Brian Kelly, we're presenting a three part series on what we can expect from the new Biden administration. Today, we're presenting part two, an outlook on healthcare under the new administration. As we all know, healthcare and the government's involvement in it continues to have a huge impact on businesses and individuals alike. So navigating those issues within the context of the Biden administration and the democratically controlled Congress is crucial to personal and professional success. Here with me today to discuss what we can expect over the coming months and the next four years is my partner, Craig Haran. Craig leads up our healthcare practice at Frantz Ward. He counsels healthcare providers with regard to healthcare corporate, regulatory and risk management issues. He assists clients in healthcare transactions, advises on the design of healthcare joint ventures and serves his outside general counsel for community healthcare systems, cancer centers, medical practices, and management services organizations. He also counsels non-profit organizations and corporate formation and tax exemption issues. Craig has served on nonprofit boards as well, offering his time and expertise. He resides in Bath, Ohio with his wife and two children. And in his free time enjoys traveling, running, and spending time with his family. Thanks for being here with us today, Craig.

 

Craig Haran: Thanks Mike. Happy to be here.

 

Mike Smith: Now, before we get talking about healthcare, I heard your daughter, Madeline, is doing something really special in helping people out during the COVID pandemic. Can you tell us a little bit about that?

 

Craig Haran: Yeah. My daughter Madeline is 15 and she's a sophomore at Walsh Jesuit High School in Cuyahoga Falls. And when the pandemic hit and everything was shut down, she wanted to try and help folks who were really home bound, people in nursing homes and assisted living facilities, who were really cut off from the rest of the world. And she and a friend founded a charity called Spiritual Sugar, which essentially gathers homemade cookies from other volunteers, packages them in baggies with a inspirational quote or scripture passage, and then delivers those cookies to nursing facilities, to distribute to residents. She was doing it weekly during the summer. We've kind of cut back a little bit to once a month during the school year, but on a night where we're doing cookies, we're putting 300 cookies into bags to distribute the next day at various nursing homes. So it's been a lot of wonderful work for people. Hopefully, they're enjoying them. It's tough because you can't go in and see them. But really proud of her for taking that step and being involved in it. I myself am really just help in bagging and helping to get the orders together for the next day. She's handled everything else. So really proud of her for doing that.

 

Mike Smith: Oh, that's great. I'm just glad to hear you're not involved in the cookie baking part of it.

 

Craig Haran: Yeah, me too.

 

Mike Smith: No, it's nice to hear about some of the silver linings out there during the COVID cloud and sounds like a fantastic daughter and you should be proud.

 

Craig Haran: Well, thank you. I am very, very proud.

 

Mike Smith: So let's start with the basics. President Biden just issued some executive orders. Can you tell us a little bit about what he did in connection with those orders?

 

Craig Haran: Yeah. So as with any president or a change in administration, he's really taking steps to lay out his priorities. And in healthcare, he immediately took some actions via executive orders to return healthcare policy to what it was when Obama was president and when he was vice president. His quote really says a lot about his policies here. He says, "It is the policy of my administration to protect and strengthen Medicaid and the ACA and to make high quality healthcare accessible and affordable for every American." And so he's going to do that by doing a top down review of many of the policies and rules implemented over the past four years. And he's going to attempt, broadly, to increase access and care and reduce barriers to the use of available options for coverage. So he's really reviewing those with an eye towards promoting comprehensive care and access to healthcare for everyone.

 

Mike Smith: So how's that going to impact the logistics for federal health policy?

 

Craig Haran: Well, we're going to see a lot of tools brought to bear to bend the executive agencies and to get policies going outside of what Congress would do. A lot of this is by rule making. It's going to take quite a bit of time to do that. It may take this whole presidency to get back to where things were. That's how long it could take.

 

Mike Smith: And can you give our listeners some idea or some examples of what you're talking about in terms of these executive and agency policies and how that's going to work?

 

Craig Haran: Sure. The orders fall into a couple of categories. I mean the first one is an executive order and that's really, just a presidential fiat that can be changed immediately by the president that are broad directives that do not require an act of Congress or a rule process to be effective. That's what Biden did when he took office. They can be repealed, modified or replaced at the whim of the president. The second category is rule making, and that's much more complicated. And in rule making, the government has to follow what's called the Administrative Procedure Act. And that governs the process by which federal agencies develop and issue regulations. It requires the government to publish a notice of a proposed rule or a proposed action to repeal or modify a rule and solicit comments from the public. It gives the public an opportunity to participate in that process, in a meaningful way. And once all those comments have been gathered and reviewed, then the agency has to take them into account and publish whatever rule they're going to do, whether it to repeal the rule, to amend the rule or make a new rule. And then there's a waiting period, a minimum of 30 days from when it's posted in the federal register until when it becomes law. So it's a very complicated process and it has to be followed and it takes time. So the actions that Biden took with respect to his executive orders start that process of reviewing those rules. But it's going to take considerable amount of time to get those rules into place, revised, modified, changed or repealed. And that's not something that he can shortcut. If you do shortcut it, the whole process can be thrown out by the courts. And we saw that happen under the Trump administration with respect to some of the actions that Trump tried to take to repeal DACA and some of the immigration policies for deferred action for childhood arrivals. When that process of rule making wasn't followed the courts invalidated those actions. So it's very important that you follow them or the whole process has to start from the beginning.

 

Mike Smith: Okay. So we got a flavor of the process. So let's talk substance. So what's going on with the ACA and what Biden is currently doing?

 

Craig Haran: That's a great example of the president's powers as an executive versus his right to make directives to his cabinet secretaries, to modify policies through rule making. So from an executive order standpoint, he issued an order on January 28th that reopened the Affordable Care Act, or the ACA, also commonly known as Obamacare, marketplace for enrollment for a three month period, beginning February 15th. So what does that do? Well, that allows for folks who are in need of insurance to log on to the federal marketplace and shop for insurance. Normally, that process is not open except for six weeks a year, between November 15th and the end of the year. So to open it in mid-February through mid-April is a pretty big development. 36 states use the federal exchange, 14 states have their own. It's anticipated that those 14 states will likewise open their exchanges as well for shopping. So that's going to allow people who don't have coverage or may have lost coverage or being transitioned due to COVID and the pandemic to take advantage of that. He's also allowed for spending on marketing to allow the Department of Health and Human Services to make people aware of the marketplace, that it's open and that enrollment can occur now. That's something that the Trump Administration had not allowed for previously. So that's a pretty big development as well. Now, that's happening right away.

 

Mike Smith: How about with regard to what lawsuits are out there, challenging the ACA, is he doing anything with those at this point?

 

Craig Haran: Yeah, he is. So that's another place where the executive has a lot of power to make discretionary decisions. So the Trump Administration was pursuing a couple of lawsuits that were seeking to invalidate the entire ACA, or Obamacare. And that invalidation was on the basis that Congress eliminated what was called the individual mandate. And that was a tax penalty that was in place if an individual chose not to obtain health insurance coverage, a tax was imposed on the individual for making that decision. It really is a carrot and stick type of approach, the stick being okay, you don't have coverage. Well, you're going to be taxed as a penalty for not having it. Congress repealed that and the argument in front of the Supreme Court was, well, if you don't have that tax penalty, then the entire ACA falls apart and is no longer an appropriate law and should be ruled invalid. It's very likely that Biden will withdraw that lawsuit that's currently pending in front of the Supreme Court. That's an unusual action to take. That usually doesn't occur. But given that Biden helped create the ACA, was at president signing by President Obama and had a colorful quote at the time, it seems very likely that he will take that action. And again, that's not something that requires any more than the attorney general to make the decision not to continue that case in front of the Supreme Court.

 

Mike Smith: And then with regard to the plans that are going to be offered, is there going to be any kind of difference from an agency perspective what they're offering?

 

Craig Haran: Yeah. So the executive order asks the agencies to review all of the policies and rules and directives that the Trump Administration imposed over the past four years related to ACA policy. And the criticism of Trump's policies with respect to the ACA is that they're really designed to make the ACA fail. How would that happen? Well, the ACA envisions that the coverage offered would always be comprehensive or have a list of essential benefits that was a full plate of benefits that it would cover nearly everything you could think of, that you could have an issue with as a person in healthcare. On the flip side, that's expensive and it really requires full participation from the population to be feasible, economically. What Trump did was he created what's called skinny plans, plans with limited benefits or limited time periods. That really would be beneficial to healthier people in their mid 20s to mid 30s, people with not a lot of prior health conditions, plans that are less expensive to pay for and consequently will have lower premiums. Well, the flip side of that kind of a policy is that it's going to pull all the healthy people out of the marketplace and put them into these plans. And so what happens to the other more comprehensive plans? Well, if you don't have healthier people involved to prop up the premiums, it really causes those plans to have a risk that they will fail. So Trump's policies are going to be looked at to see where they can be repealed in that respect. So we will likely see that skinny plans will be invalidated or set aside and plans of shorter duration, less than a year, also will likely be put aside all for the benefit of the whole to make sure that the ACA is stable from a participation standpoint and continues to provide essential coverage for everyone going forward.

 

Mike Smith: I know another issue that's having a big impact as it relates to the ACA are issues relating to Medicaid and Medicare. Can you just briefly outline for some of those issues that have arisen, or will arise?

 

Craig Haran: Yeah, sure. So first, just to make sure everyone's aware, so Medicaid is the sibling program to Medicare. It's a state federal partnership program where if a state adopts the program, then the federal government will pay a significant portion of its costs. And in many cases, at least 50% of the cost of the program. The other half comes from the state. In exchange, states have to provide a minimum set of benefits, have to follow certain rules on eligibility, et cetera. What Trump did over the past four years was through what's called waivers, he allowed states to innovate from the standard Medicaid requirements and to create new programs or to impose new barriers to access to Medicaid that were controversial. One of the key ones there was that some states asked or were given permission to impose work requirements. It's very likely that Biden will seek to remove those waivers. And again, the goal there is to make sure that Medicaid, as the program of last resort for folks, is available regardless of your ability to work or volunteer, et cetera. So we're going to see steps by the administration to expand access to Medicaid programs by people throughout the country.

 

Mike Smith: Okay. And then how about Medicare?

 

Craig Haran: So Medicare, again, this is where the president's powers are limited because Medicare is governed by thousands of rules and regulations. And all those regulations have gone through that Administrative Procedure Act process I mentioned earlier. And so in order to change those rules, it's going to take a lot of time going through notice and comment rulemaking. However, he is able to take action to stop the presses with respect to rules, which have not gone into effect yet. And so like any administration, when it comes into office, Biden issued basically in a moratorium order that ceased and held for 60 days, all pending rules that the government had ready to go that weren't yet effective as of January 20th. And there were several that affected Medicare. Some of them are likely to become law after this 60 day waiting period. But we'll see. The president may decide, or his administration may decide that he wants to add a different flare go in a different direction. For example, some of those rules in include a rule tying the reimbursement available for certain Medicare drugs to international pricing. He's also got a rule that was going to be effective later in the year that was intended to prohibit certain pharmacy benefit managers from receiving certain discounts or rebates on the drugs that they brokered. Again, the idea being to pass the drug savings directly onto consumers. He also put into effect a moratorium requiring certain health centers to pass on discounts they receive for insulin and epinephrine directly onto beneficiaries. So again, those all sound like pretty reasonable rules if you're a consumer. And I think it's likely that they will become why at some point. Again, they may change, but the president does have that power to enter into a moratorium to stop them from going into effect right now until he has a chance to look at them.

 

Mike Smith: Well, it sounds like we got a lot to look forward to when it comes to those kinds of roles. What about reproductive rights? That's always a hot topic. What's going on with that?

 

Craig Haran: Yeah. So a couple of things, the president issued an executive order that reversed what's called the Mexico City policy. So in a nutshell, the Mexico City policy prohibits foreign aid to non-governmental organizations. If they refer or provide abortion services, this is a hot button issue, the policy comes from the Reagan administration, every democratic administration since has repealed this rule and every Republican since has reinstated it upon obtaining the presidency. Another rule, which is going to take some time to unwind is what's called the Gag Rule for Title X programs. Title X programs, they offer reproductive services in community based settings. The Gag Rule prohibits Title X recipients from referring or offering abortion services as a condition of receiving that funding. This rule cause Planned Parenthood to exit that program. We can expect that this Gag Rule will be repealed at some point, so that those types of services can be discussed and or offered by Title X programs in the future. We could also expect to see some more litigation on certain religious exemptions from offering certain family planning services and health plans. There is a Supreme Court decision on that issue, which kind of colors what can be done there. But I would expect to see that there'll be some pushback on what constitutes a religious organization or bonafide religious objections to certain types of healthcare coverage in this area. And so I think we will see some action there as well.

 

Mike Smith: So we can't leave the discussion of the ACA without weighing in on the COVID 19 response. Do you have any comments on that?

 

Craig Haran: Yeah. A lot of things have happened there obviously, and this is the big elephant in the room with respect to all of this, because it's going to take a lot of the administration's time going forward. As a starting point, Biden reinstated the office that coordinated national strategy for responding to pandemics. Trump had eliminated this office shortly after taking office. So that's been reinstated. The US will rejoin the World Health Organization and will collaborate on global health issues, including COVID going forward. That was something that Trump also did last year. He also took immediate action to mandate adherence to CDC guidelines, including wearing face masks, social distancing, and other public health measures, anywhere that the president has the authority to do that. So that would include federal sites, federal employees, federal contractors, persons in federal buildings, or on federal lands. There are limits to that from federalism. He can't do that in states, but he can do that anywhere that the federal government has jurisdiction. He also has entered an order that people have to wear masks in interstate commerce, meaning if you're in a common carrier airport, airplane, ferry, bus service, et cetera, you have to wear a mask. Now, that was something that Trump had resisted doing. So we're seeing a lot more direct requirements for public safety around COVID-19, at the federal level, we weren't seeing before.

 

Mike Smith: And I imagine that's really going to take precedence on a lot of this stuff before the substantive ACA stuff gets dealt with.

 

Craig Haran: Yeah. I would imagine that we're going to see COVID is going to, for obvious reasons, it's going to dominate the discussion at least through the rest of this year. Maybe even into the beginning of next year.

 

Mike Smith: Craig, we really appreciate you sharing this insight with us today and for our listeners out there, just to cap some of the takeaways from today's discussion, COVID relief is going to take precedence for a while before other things get going. Not much is going to happen without going through at least the notice, comment and making process that needs to be filed, so things are going to take a little bit of time. And that whatever comes about, the Affordable Care Act is probably going to be structurally different than what was originally passed under the Obama Administration. But President Biden is trying to get back to there. So again, Greg, thanks for being here with us today.

 

Craig Haran: Thanks Mike. It's been a pleasure.

 

Mike Smith: That wraps up another episode of Shoveling Smoke. Thanks for checking in with us. See you next time.

 

Shoveling Smoke is a production of Evergreen Podcasts. Our producer and audio engineer is Sean Rule-Hoffman. Thanks for listening.