Regs on the Menu for Rescission Under Budget Reconciliation
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January 23, 2025 – Over the next several weeks, both the Trump Administration and the 119th Congress will review the “menu” of Biden-era regulations that they may want to rescind or modify. In one of his first orders, President Trump (like previous incoming presidents) put a hold on any new regulations going to the Federal Register. The memo, entitled “Regulatory Freeze Pending Review,” also calls on federal agencies to review regulations that have been published in the Federal Register but have not yet gone into effect, and to consider postponing the regs’ effective dates by 60 days from the date of the memo (January 20, 2025). While this order from the president does not immediately rescind any regulations, it does give the Trump Administration the opportunity to review regs put out by the Biden Administration and possibly halt new policies from going into effect. In order to delay the effective date of regs, the Trump Administration would need to issue a notice in the Federal Register stating that X regulation with an effective date of Y date is now delayed to Z date. Thus, we will be monitoring the Federal Register closely for these types of notices.
The Trump Administration won’t be acting in a silo. Its actions on Biden’s regs may be influenced by Congress’ decisions in the budget reconciliation process. Recently, a 50-page document has been circulated that is reported to be legislative policy options from Republicans in the U.S. House of Representatives that could be considered during budget reconciliation. While most of these options would reduce federal spending, some would cost money. The cost and savings projections are not sourced, so it is unclear how exactly the estimates were developed. Embedded within this document are healthcare-related proposals, including proposals that would rescind certain Biden regs. So, those of us who watch regulations will need to look not only at what happens through the Federal Register and agency action, but also at what Congress may have in store for certain key regs.
The congressional document includes the following menu of Biden-era healthcare regulatory rescissions:
- Repeal CMS Nursing Home Minimum Staffing Final Rule. The document states that the Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting reg, which was finalized in May 2024, “would impose minimum staffing standards on long-term care facilities, creating an unfunded mandate on critical health care facilities across the country, threatening provider facility closures and patient access to care.” The document estimates that repealing the reg would save up to $22 billion over 10 years. This reg has been in the spotlight recently as having a high probability of rescission as part of budget reconciliation given its significant savings.
- Repeal Deferred Action for Childhood Arrivals (DACA) “Obamacare Subsidies Final Reg.” The document states that in May 2024, the Biden Administration finalized a reg that “would allow DACA recipients to enroll in subsidized marketplace and basic health program plans. The rule expands eligibility by modifying the definition of ‘lawfully present’ to include DACA recipients.” The document estimates that rescinding the reg would save up to $6 billion over 10 years.
- Repeal Obamacare Subsidies “Family Glitch” Final Rule. The document states that the “text of the Affordable Care Act (ACA) made it clear that individuals with affordable employer coverage (as defined in the law) are not eligible to receive Obamacare subsidies for ACA plans. The affordability standard in Obamacare specifically applied only to individuals and not to the cost of family coverage overall. The provision was written this way to reduce the Congressional Budget Office (CBO) score for this provision. In October 2022, the Biden Administration illegally altered the ACA by creating a new affordability standard to both employees and their dependents, running afoul of the text and Congressional intent of the law, resulting in individuals leaving employer coverage and onto ACA plans.” The document estimates that repealing the reg would save up to $35 billion over 10 years.
- Reverse Executive Expansion of State-Directed Payments in Medicaid. The document states that “the Biden Administration finalized regulations effectively removing limits on the levels of state-directed payments (SDPs) in Medicaid, which are used to artificially increase federal Medicaid matching funds. This policy would impose limits on SDPs.”
The Paragon Health Institute notably has weighed on this issue. In a November 2024 issue brief, the Paragon Institute stated that “[b]y allowing states to direct higher payments to specific providers (mostly hospitals), the rule advantages politically-connected providers with increases in payments that will be mostly, if not entirely, covered by the federal government. Another problem with this rule is that it incentivizes providers to increase their commercial rates. Because this rule enables states to pay providers up to the ACR (average commercial rates) courtesy of the federal reimbursement, providers will want to increase the rates they charge commercial payers in order to raise the ACR and thus what they receive through Medicaid. In essence, under this rule, the federal government rewards providers for charging higher commercial rates.”
The congressional document states that imposing limits on SDPs would save up to $25 billion over 10 years.
- Repeal Biden Administration Finalized Medicaid/CHIP ACCESS Reg. The document states that “in May 2024, the Biden Administration finalized a rule focused primarily on expanding access to Home and Community Based Services (HCBS) in both fee for service (FFS) Medicaid and in managed care plans, including by instituting worker compensation requirements.” According to the document, rescinding this reg could save up to $121 billion over 10 years.
- Repeal Biden Administration Finalized Medicaid Eligibility Rule. The document states that “[i]n September 2023 and April 2024, CMS finalized two parts of a rule that governs protocols for states verifying Medicaid and CHIP eligibility. Among other things, the proposed rule imposed a prohibition on conducting eligibility checks more frequently than once every 12 months, elimination of the requirement for in-person interviews for some populations, and minimum time allowances for enrollees to provide documentation needed.” According to the document, rescinding this reg could save up to $164 billion over 10 years.
Beyond these legislative options for rescinding Biden-era regulations, other options on the menu have regulatory implications (many of which have been discussed in previous Regs & Eggs blog posts):
- Reform Medicare Physician Payments. Of great interest to many providers, this option would “reform Medicare’s physician payment system to encourage more predictability and certainty.” The document estimates that this proposal could cost up to $10 billion over 10 years, but that cost would definitely be dependent on the scope of the policy.
- Pursue Medicare Site Neutrality. This option supports “Medicare site neutral payments by equalizing Medicare payments for health care services that can be safely delivered in a physician’s office,” yielding a potential savings of $146 billion over 10 years – although again the amount of savings would depend on the details of the policy.
- Include Geographic Integrity in Medicare Wage Index. This option would enact “geographic integrity in Medicare’s Wage Index calculations to reduce overpayments to urban hospitals,” yielding a potential savings of $15 billion over 10 years.
- Eliminate Inpatient-Only List. This option would eliminate the inpatient-only list “so more same-day surgeries and procedures can be performed in lower cost, outpatient settings.” As stated in a previous Regs & Eggs blog post, the first Trump Administration attempted to eliminate the list, but that policy was never effectuated. The congressional option would save up to an estimated $10 billion over 10 years.
- Codify Individual Coverage Health Reimbursement Arrangement (ICHRA). This option would codify the ICHRA Treasury rule “to allow companies to offer their employees defined benefit contributions towards qualified health plans.” This proposal would also “[e]nact H.R. 3799, the Custom Health Option and Individual Care Expense Arrangement Act reported out of the Ways and Means Committee on June 7, 2023.” This option does not have an estimated budgetary impact.
- Reinstate Public Charge Reg. The document states that the “the public charge rule reduces the number of people eligible for green cards or visas by redefining what made them dependent on government benefits. This policy was expanded under the Trump Administration with two proposed rules in 2019. Neither are in effect. This policy would prevent people who are unable to take care of themselves from benefiting from long-term care at the government’s expense.” The document estimates that reinstating this reg would save $15 billion over 10 years.
The congressional document includes many other possible healthcare legislative options besides those with direct regulatory implications. Some of these would impact large-scale healthcare programs and policies, such as those related to:
- Hospital nonprofit status
- Medicaid benefits and federal Medicaid payments
- Medicare bad debt
- Uncompensated care
- Graduate medical education payments
- Telehealth coverage
- ACA advanced premium tax accounts
- Health savings accounts
- Inflation Reduction Act drug provisions
- Center for Medicare and Medicaid Innovation models
- Post-acute care
- 340B drugs
- Price transparency
- Association health plans
Just like a patron at a restaurant, it is unlikely that Congress will choose to “eat” everything on the menu for reconciliation, but nonetheless these possibilities are now out in the open for consideration. It will be interesting to see in the days and weeks ahead which options the 119th Congress pursues, and which the Trump Administration might address separately through the regulatory process. We will keep you updated as the list gets narrowed down and the specific options (and associated cost and savings estimates) become more refined.
Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.
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