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Thursday, February 16, 2017

Executive orders and family medicine

Amid the furor surrounding other executive orders recently signed by President Donald Trump, family physicians may find one on which they can agree.

On Jan. 30, the administration issued an executive order titled, “Reducing Regulation and Controlling Regulatory Costs.” The order establishes a framework designed to reduce the cost of compliance with federal regulations. First, it provides that federal agencies, when proposing a new regulation, must “identify at least two existing regulations to be repealed.” Second, it requires that the incremental cost of any new regulation be “no greater than zero.”

The stated intention of the executive order is to decrease the cost of running a business (such as a family medicine practice), to the extent that regulations from federal agencies contribute to such costs.  The order says that all new regulations must be cost-neutral and that the net impact (new regulation minus the two repealed regulations) cannot increase "incremental costs" on the regulated community. Finally, exceptions will be considered on a case-by-case basis. 

The implementation of the order is left to the Office of Management and Budget (OMB). On Feb. 2, OMB issued to all government agencies a memo containing interim guidance and frequently asked questions on how to implement this order.  This memo clarifies that:

•    The order applies to "significant" regulations. "Significant" is not defined in the guidance, but under a 1993 Executive Order still in effect, a "significant" rule is defined as any that imposes an annual economic cost of $100 million or more.  
•    Government agencies intending to issue a “significant regulatory action” on or before Sep. 30, must first “identify two existing regulatory actions the agency plans to eliminate or propose for elimination” before the new regulation is issued.
•    Agencies must “fully offset total incremental cost” of the new regulation as of Sep. 30.
•    The costs of regulations are “measured as the opportunity cost to society,” defined as "the net benefit [a] resource would have provided in the absence of the requirement."
•    Waivers exist for regulations that address health, safety or financial emergencies. 

Future rules governing Medicare physician payment (such as those implementing the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA) could be shaped by this order. Stay tuned!

– Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians

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