Regulatory Activity Continues While the 115th Congress Draws to a Close

Hand pulling curtain over capitol
By Alpha Lillstrom Cheng, JD, MA
October 10, 2018

The 115th Congress began with the Republican majority in both houses of Congress making many promises of policy change.

The potential of those proposed changes becoming law were rather good because the president is also a Republican. In a previous article, I wrote about the near misses and Congress’s failed attempts to revise and reform the Affordable Care Act (ACA).

The law that most significantly altered the ACA was the tax reform legislation passed in December 2017, which effectively repealed the requirement that every American be covered by health insurance by reducing the fine for noncompliance to zero dollars.

Although Congress writes and passes legislation that becomes law, generally those laws provide only a skeleton of principles and legislative intent. It is the responsibility of the appropriate executive branch agency to implement regulations to flesh out the laws and provide specific guidance to those whose work or professions are impacted. Agencies are tasked with developing, proposing, and then finalizing regulations to implement legislation or modify previous regulations to better match the policy priorities of the current administration. In June’s Advocacy in Action, I discussed how the executive branch is exploring ways to reform health insurance outside of the legislative process, including seeking to extend the length of a short-term health insurance policy to a full year as well as to allow more individuals to join together to purchase insurance via an association health plan to a larger pool of people. These successful executive branch efforts are fully within the scope of the Department of Health and Human Services’ regulatory authority.

Continued Regulatory Efforts

Sometimes an agency is seeking to modify previous regulations but has yet to decide precisely how to use their regulatory authority. In these situations, they will release a Request for Information (RFI). An RFI is a formal way for an agency to solicit input from a wide range of individuals or industry representatives who would be impacted by the issue being discussed. The agency usually poses specific questions to the stakeholders and requests feedback. It is expected that the feedback submitted could impact a proposed rule that the agency would develop in the future. While a proposed rule is a natural next step, an agency is not required to produce one just because it requested feedback on an issue. An agency could delay any further action or even adjust course and not pursue any changes to the policy being discussed.

This year the Department of Health and Human Services (HHS) published two RFIs which the Private Practice Section (PPS) has decided to respond to, the first being an inquiry about how to modify, if at all, the regulations related to direct provider contracting. The second RFI of interest to PPS is seeking input on how to modernize the physician self-referral (Stark) law to allow for more flexible bundled-payment protocols. When responding to an RFI, stakeholders’ comments should answer the relevant questions posed; however, this is also an opportunity to educate the agency about issues and perspectives it had not considered. Comments do not have to be limited to the focus of the agency’s inquiry.

Direct Provider Contracting

In April, the Innovation Center of the Centers for Medicare and Medicaid Services (CMS) requested stakeholder input on direct provider contracting (DPC) between payers and primary care or multispecialty group practices. Responses to this RFI will inform potential testing of this approach within the Medicare fee-for-service program, Medicare Part C program (also known as Medicare Advantage), and Medicaid. CMS’s view is that “direct provider contracting would enhance the beneficiary—physician relationship by providing a platform for physician group practices to provide flexible, accessible, and high-quality care to beneficiaries that have actively chosen this type of care model.”1 Due to the policy focus on the ability of a provider to contract directly with his or her patient for care, this issue has some, but not total, overlap with the Medicare opt-out policy, which has been endorsed and pursued by PPS. While the questions posed by CMS were clearly focused on the physician community, PPS submitted a comment letter in response to the RFI. PPS’s comments discussed how best DPC could be utilized by private practice physical therapists.

The RFI asked about the feasibility of implementing per-beneficiary per-month (PBPM) payments in a DPC model. PPS’s comments pointed out that the discrete subset of individuals who have chronic or degenerative physical conditions and who seek regular and continuous habilitative therapy treatment would be best suited for participation in a longer-term PBPM arrangement. However, PPS also pointed out that the DPC model using PBPM payment structures may not be a good fit for most physical therapy patients as their care is of limited duration, and therefore they would need to be allowed to enroll and disenroll from a PBPM arrangement at any time. Additionally, PPS cautioned that capitation models have been tried in the commercial insurance market and were difficult to manage for physical therapy; many providers experienced losses and opted out. The comments submitted made it clear that one of the Section’s gravest concerns is how small-volume outpatient physical therapy clinics could participate in DPC models without risking the financial well-being of their business and therefore suggested that a low-volume exemption might be in order. Furthermore, in order to address the factor of the financial feasibility of participation for all outpatient therapy clinics, PPS suggested that participating DPC model providers should be able to utilize telehealth and health care extenders in order to achieve overall improved outcomes at a set expenditure.

With regard to general model design, PPS appreciated that CMS is committed to reducing burdensome requirements and suggested that CMS retrieve the necessary data from what is already being submitted so as not to increase burdens on providers. Finally, PPS shared its significant concerns that based on how the RFI’s questions were posed, the CMS model might allow companies, hospitals, or clinics to incentivize potential patients to enroll in a DPC model with their own providers, which could effectively exclude or hinder patients’ option to receive care in a private practice setting. The Section’s comments argued that it is paramount that providers not be allowed to offer incentives to beneficiaries that would induce patients to obtain their rehabilitation therapy from a participant practice or other specific suppliers and providers.

Stark Law Modernization

With a goal of accelerating the transition to a value-based system, HHS and CMS are prioritizing the implementation of regulations to remove what they see as unnecessary government obstacles to team-based care. In the June 25 Federal Register, CMS published a Request for Information seeking recommendations and input from the public on how to rethink appropriate safeguards when faced with the current physician self-referral law acting as a barrier to coordinated care. As you know, the Stark law prohibits a physician from making referrals for designated health care services to an entity with which he or she (or an immediate family member) has a financial relationship. Clearly, efforts to coordinate care and share both risk and reward across a team of interconnected providers would be in direct opposition to the restrictions the Stark law imposes. There are some statutory and regulatory exceptions to the law such as the In-Office Ancillary Services Exception (IOASE) and waivers that have been granted for CMS-led models. Under Stark, claims for services resulting from a prohibited referral may not be filed with Medicare, and Medicare cannot pay any such claims. The administration sees the self-referral prohibitions of the Stark law to be a hindrance to progress toward value-based coordinated care and the use of bundled payments and thus are seeking to modify the regulations.

PPS acknowledges the reality that health care delivery has evolved and thus the Stark law is out of date. In order to enable value-based care arrangements that coordinate care and improve quality while reducing unnecessary costs, the self-referral prohibitions policy needs to be examined and modified. However, the additional flexibility must be granted judiciously in order to protect against waste and abuse in the program. Safeguards must be put in place to prevent financial arrangements that could skew incentives and leave patients vulnerable. It is also crucial that there is proper oversight of exceptions granted and that care which takes place within the IOASE is also based on value.

PPS plans to submit comments to the RFI that will support the modernization of the physician self-referral law. At the same time, those comments will argue that including physical therapy in the IOASE was misguided and that CMS should take this opportunity to remove physical therapy from the list of designated health services under the IOASE. Comments will remind regulators that physical therapy is not a same-day service, and it is certainly not possible to complete a care plan in one day; thus its inclusion as a tool that would improve coordination of care or promote patient convenience is unfounded and inappropriate. While PPS comments have not been compiled or submitted as of this writing, by the time this article is published they will have been filed and published on the advocacy section of the PPS website.

While regulators are working on this issue, legislators also recognize that in its current form the Stark law’s physician self-referral prohibitions forbid some relationships that are prime opportunities to move to value-based care through bundled-payment arrangements and Accountable Care Organizations. On July 17, the House Ways and Means Committee hosted a hearing on the issue entitled, “Modernizing Stark Law to Ensure the Successful Transition from Volume to Value in the Medicare Program.” PPS submitted a question for the record requesting that a tailored approach to updating the Stark law should include revision of the In-Office Ancillary Services Exception to remove physical therapy and other services that are not same-day services. As efforts to modernize physician self-referral restrictions move forward, it will be interesting to watch which branch of government gets the last word. Congress may be slower to act, but it has the ability to make more significant changes to the policy.

Make Your Mark

In an election year, while regulatory efforts are ongoing, most legislating grinds to a halt by the Fourth of July. For the summer and fall months, incumbents seeking reelection are focused on their campaigns, which is why these past few months have been a prime time to engage candidates and educate them about the value and importance of physical therapy. Those senators who are not up for reelection sometimes travel around the country attending rallies and fundraisers for their colleagues in the House and Senate who are facing challenging or expensive campaigns. Then comes Election Day—November 6 this year—when all the campaign work, slogans, TV ads, direct mail, and general fervor comes to a close. By the time we gather for the PPS Annual Conference, most—if not all—election results will be clear. Some sitting members of Congress will have lost their election bids. If the Democrats win the majority in the House (which is quite possible) or in the Senate, it is highly probable that there will be a scramble by Republican leadership to make the most of their waning days in the majority to pass some legislation before the end of the year. This period of time between the general election and early January when the newly elected members are sworn in is referred to as the “lame duck” period.

As discussed in this article, policy can be modified via regulations as well as through the passage of new laws. While there are over two years left in the current administration, if you disagree with the trajectory or impact of the regulatory efforts of an agency, remember that congressional action can provide a check and balance on the executive branch’s authority. As you have seen, much rides on the makeup of Congress and which party is in the majority. As a voter you can help choose the legislators who will represent you—at the federal, state, and local level. Register to vote and make a plan to cast your ballot. If you plan to attend the PPS Annual Conference at the Broadmoor only two days after the November 6 general election, it might be prudent to either vote early or request and use an absentee ballot in order to cast your vote. Check your state’s Board of Elections website for early voting dates (if applicable), the relevant deadlines for requesting an absentee ballot, as well as the date the absentee ballot needs to be sent or received in order to be counted. Each state’s deadlines and protocols are unique.

Planning for the 116th Congress

In December, the PPS Government Affairs Committee (GAC) will meet to evaluate the PPS legislative and advocacy priorities and determine what policy issues and goals are to be the Section’s priority for the 116th Congress. While the administration’s regulatory efforts are expected to continue on the same path, the makeup of the incoming Congress will impact which issues are evaluated as well as acted upon legislatively. Now is a prime time for members to weigh in as to what you would like to see the Section focus on. Please contact any member of the GAC or PPS Board if you feel there is an issue that should be addressed so that it can be brought forward and considered at the December planning meeting.


While Congress’s ability to pass laws to change policy is well known, the executive branch also has multiple tools through which to consider, craft, and conceive regulations. Most familiar is the pattern of proposed rules, stakeholder feedback, and the final rule that follows. The RFI is an often-overlooked opportunity for stakeholders to influence and shape the thinking of regulators in the early stages of regulatory decision making. With the interests of private practice physical therapists in mind, PPS has submitted feedback to CMS showing how the patient-centric, high-quality, community-based care provided by physical therapists in private practice would be impacted by the concepts proposed by CMS. As these conversations progress, we will keep PPS membership apprised of how any proposed changes could impact you as well as your patients.



Alpha Lillstrom Cheng, JD, MA, is a registered federal lobbyist and a principal in the firm Lillstrom Cheng Connolly, which has been retained by PPS. An attorney by training, she provides guidance to companies, nonprofit organizations, and political campaigns. For six years, she served as Senior Policy Advisor and Counsel for Health, Judiciary, and Education issues for Senator Jon Tester (Montana), advising and contributing to the development of the Affordable Care Act, as well as working on issues of election law, privacy, government transparency, and accountability. Alpha has also directed Voter Protection efforts for Senators Bob Casey, Al Franken, Russ Feingold, Mark Begich, and Katie McGinty. She was Senator Franken’s Policy Director during his first campaign and was hand-picked to be the Recount Director for his eventual 312-vote win in 2009.

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