HCM 480

Healthcare Policy and Reform

Patrick Grusenmeyer, ScD

September 17, 2020 – Week 4

Policy Implementation: The Executive Branch
and
Designing, Rulemaking, Implementing & Evaluating
 Learning Objectives
Policy Implementation:
The Executive Branch
1. Describe the responsibilities of the executive, legislative, and
judicial branches of government in policy implementation
2. Explain why the Centers for Medicare & Medicaid Services (CMS)
is an important policy-implementing organization
3. Describe the organizational structure of CMS
4. Discuss the functions of CMS
5. Discuss the management aspects of policy implementation
6. Discuss the management challenges CMS faces in carrying out its
policy implementation responsibilities

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 Introduction to Policy Implementation
• Enactment of laws and amendments marks the transition
from policy formulation to policy implementation
• Implementing organizations in the executive branch carry out
the intent of public laws as enacted by legislative branch
• Primarily a management undertaking
• Carried out through designing, rulemaking, operating, and
evaluating
Policymaking Process: Implementation Phase

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Responsibility for Policy Implementation

Three branches of government share responsibility

• Executive branch plays central role
• Legislative branch oversees
• Judicial branch referees

Primarily Executive Branch responsibility to implement

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 Executive Branch Organizations
With Health Policy Implementation Responsibility
• Implementing organizations:
– HHS – Department of Health and Human Services
– CMS – Centers for Medicare and Medicaid Services (part of HHS)
– DOJ – Department of Justice
– OMB – Office of Management and Budget
– FDA – Food and Drug Administration (part of HHS)
– EPA – Environmental Protection Agency
– IRS – Internal Revenue Service
• CMS is heavily involved in implementing important health policies
– Examples: Medicare, Medicaid, ACA
– Must coordinate with states to operate Medicaid, establish health insurance
marketplaces, expand Medicaid, and regulate private insurance plans

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Organization Chart of the
Department of Health and
Human Services (HHS)

See Page 199 in Longest text

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 Legislative Branch Oversight of
Implementation
Legislative branch is responsible for oversight

Four goals of legislative oversight

1. Ensure that executive branch implementing organizations
adhere to congressional intent
2. Improve the efficiency, effectiveness, and economy of
government's operations
3. Assess the ability of implementing organizations and
individuals to manage implementation
4. Ensure that implementation of policies reflects the public
interest

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 Legislative Branch Oversight
• Oversight is accomplished through:
– Funding appropriations
– Direct contact between members of Congress and
implementers – Oversight Committee Hearings
• Standing committees of the House and Senate:
– Has certain oversight responsibilities
– Must adopt its oversight plan in each Congress’s first
session (Rule X)

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 Judicial Branch Involvement
• Enacted legislation (laws) and the regulations (rules) made to
guide implementation can be challenged in courts
– Example – ACA lawsuits
• Administrative law judges hear the appeals of those
dissatisfied with the effects of implementation
– Example: EPA’s Office of Administrative Law Judges presides
over/permits proceedings involving violations of environmental laws
– Decisions are subject to review by Environmental Appeals Board (EAB)

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 CMS as the Implementing Agency

• CMS is the largest purchaser of healthcare in the United

States
• Budget: $1 trillion for 2015
• Provides health benefits to about 123 million beneficiaries
– Medicare
– Medicaid
– Children's Health Insurance Program (CHIP)
– ACA

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 Structure and Functions of CMS
• Center for Medicare
– Focal point for national Medicare program policies
• Center for Medicaid and CHIP Services
– Focal point for policies and operations relating to Medicaid and CHIP
• Center for Consumer Information and Insurance Oversight
– Sets and enforces standards for health insurance
– Ensures availability of affordable healthcare
• Center for Medicare and Medicaid Innovation
– Identifies, validates, and disseminates information about new care models and
payment approaches
• Center for Clinical Standards and Quality
– Focal point for quality, clinical, and medical science issues
• Center for Program Integrity
– Focal point for Medicare/Medicaid/CHIP integrity fraud and abuse issues

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 Organization Chart of the Centers for Medicare & Medicaid Services

See Page 204 in Longest text

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 Managing Policy Implementation
• Authoritative decisions are also made during implementation

• Two important management aspects

– Implementing organizations must manage the implementation of
policies
– Managers of these organizations must also oversee their own
organizations

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 Managing Policy Implementation
Some HHS/CMS Challenges
• Overseeing the health insurance marketplaces
• Transitioning to value-based payments for healthcare
• Ensuring appropriate use of prescription drugs
• Protecting the integrity of expanding programs
• Fighting fraud and waste
• Preventing improper payments and fraud
• Ensuring quality of care in caregiving settings
• Using data/technology to protect program integrity
• Protecting grants and contract funds from fraud/waste
• Ensuring the safety of food, drugs, and medical devices

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 Policy Implementation Summary

• Responsibility for Policy Implementation

– Executive branch primary responsibility
– Legislative branch oversees (has oversight)
– Judicial branch referees
• CMS as the federal Implementing Agency for health policy
• Policy Implementation is Policymaking but with a
Management Aspect

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 Learning Objectives
Policy Implementation:
Designing, Rulemaking, Implementing & Evaluating

1. Discuss the set of activities that implementing organizations

engage in as they implement policies
2. Describe the designing activity in policy implementation
3. Describe the rulemaking activity in policy implementation
4. Describe the operating activity in policy implementation
5. Describe the evaluating activity in policy implementation
6. Outline the federal rulemaking process
7. Discuss the role of interest groups in rulemaking
8. List and discuss three key variables in policy operation

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Introduction to Policy Implementation
• Enactment of laws and amendments marks the transition from policy
formulation to policy implementation
• Implementing organizations carry out the intent of public laws as
enacted by legislative branch
• Primarily a management undertaking
• Carried out through
1. designing,
2. rulemaking,
3. operating, and
4. evaluating

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Policymaking Process: Implementation Phase

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 Introduction to Implementation Activities
• Implementation involves managing human, financial, and
other resources and is carried out through a set of activities
(designing, rulemaking, operating, evaluating)
• People in implementing organizations can:
– Implement policies
– Make other policies
Carried out through:
1. Designing
2. Rulemaking
3. Operating
4. Evaluating

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 1. Designing
• Efforts to establish the agenda of an implementing
organization, plan how the work will be accomplished, and
organize the agency to carry out the plans/perform the
work, direct staff and manage results
• Agenda normally rather static
• Periodically, substantial change may occur
– Example: additional implementing responsibilities given to CMS by
the ACA

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 Reasons for Continuous Redesign
• Change occurs in an implementing organization’s external
environment
• An organization adopts new technologies
• An organization experiences a change in management
personnel
• Large-scale design changes that involve reorganization or
restructuring occur
• Changes in implementation responsibilities trigger changes
in organizational structure

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 2. Rulemaking
• Enacted laws are not explicit enough to guide
implementation
• Rulemaking: the process through which federal agencies
develop, amend, or repeal rules
– Early and vital step in implementation
• Formally established rules have the effect of laws

Rule – “the whole or part of an agency statement of general or

particular applicability and future effect designed to implement,
interpret, or prescribe a law or policy” – Administrative
Procedures Act of 1946

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 Rules of Rulemaking
• There are rules to making rules
– Federal Register Act of 1935
– Administrative Procedure Act of 1946
• Implementing agencies must publish proposed rules (i.e., a
draft)
• Those with interests can participate in the rulemaking prior
to adoption of the final rule
• Both proposed and final rules are published in the Federal
Register

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 Federal
Rulemaking
Process

See Page 225 in Longest text

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 Rulemaking for the ACA
• Example: 2013 HHS Notice of Proposed Rulemaking
related to implementing the ACA
– Oversight of premium-stabilization programs
– Program integrity of state marketplaces
– Flexibility for states
– Consumer protections for enrollment assistance
– Other operations.
• Rulemaking presents active points of involvement of
the public and interest groups in policymaking

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 Interest Groups in Rulemaking
• Every policy affects one or more interest groups
– Interest groups seek to influence rulemaking
– Result is intense lobbying
– Most politically powerful groups exert the greatest influence
• Example: Rulemaking that stemmed from the enactment of
Medicare
– Continued FFS – pay providers “Customary and Reasonable fees, in
order to secure support from doctors and hospitals

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Why have input into
Rulemaking?

Differing
Policy Preferences
of Health-Related
Individuals and
Organizations

Lobby for my
preferences

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Other Interactions Between Rule makers and Those
Affected by the Rules

• When rule development is anticipated to be difficult, special

provisions may be made
– Example: Health Maintenance Organization Act (1973)
• Another strategy is the creation of advisory commissions
– Example: Amendments to the Social Security Act (1983)

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 3. Operating
• Significant power of those with implementation
responsibility to affect the final outcomes
• Beware: Some individuals with implementing
responsibilities may not support the program/rule and seek
to stall, alter, or even subvert the laws in their
implementation phase
• Operating activities
– Example: CMS’s operation of Medicare Parts A and B

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 Some Functions Required for
CMS’s Operation of Medicare
• Includes:
– Processing claims
– Enrolling providers in the Medicare program
– Handling provider reimbursement services
– Processing appeals
– Responding to provider inquiries
– Educating providers about the program
– Administering the participating physician/supplier program

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 Key Variables in Operating Policies
The way laws are written affects how they are
implemented

Operational success depends on 3 Key Variables:

1. How the policy is designed or constructed
2. Characteristics of the organization(s) charged with
implementation
3. Capabilities of the implementing organization’s
leadership, managers and employees

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Key Variable 1. How the Policy is Designed
a. Objectives of the Policy

• Clearly articulated objectives help implementers more easily

operate the programs and procedures embedded in the law
• Multiple objectives embedded in one policy can make
implementation difficult
• When law/policy objectives are conflicting, successful
operation is difficult or impossible

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Key Variable 1. How the Policy is Designed
a. Objectives of the Policy
Example – when law/policy objectives are conflicting makes it difficult to operate.
Medicare law requires implementing agency to:

• Serve Medicare beneficiaries healthcare needs

• Protect the financial integrity of the program and preserve the solvency of the
Medicare Trust Fund
• Assure payments to providers are adequate to insure participation
• Insure the quality of services provided to beneficiaries
• Guard against fraud and abuse
• Work w/ private contractors, ensuring their quality and keeping them satisfied
• Work w/ states, respond to Congressional oversight, and serve the political and
policy priorities of the executive branch

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Key Variable 1. How the Policy is Designed
b. Hypothesis of the Policy

• Hypothesis – If someone does a, then b will result

• If the hypothesis is wrong, its operation will not solve the
problem the policy is intended to address

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Key Variable 1. How the Policy is Designed
c. Flexibility in Operating the Policy
• Although some flexibility can be advantageous, vague
directives can create additional problems
– Example: Occupational Safety and Health Act of 1970 - flawed vague
directives and phases – “insofar as possible”, “to the extent feasible”,
combined with limited enforcement capabilities (fines for violation
too small to impact)
• Restrictive language can also impede implementation
– Example – the Older Americans Act: provided extensive
implementation guidance and flexibility

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 Key Variable 2
Characteristics of Implementing Organizations
• Good fit between implementing organization and policy is
determined by whether the organization:
1. Is sympathetic to the objectives of the law/policy
• Senior leaders’ attitudes and beliefs
2. Has the necessary resources to implement
• Resources: budget/staff, other resources (e.g., technology) must be
adequate for implementation challenges

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 Key Variable 3
Capabilities of Managers
Management is essential in any purposeful organization. Leadership must
determine, initiate, integrate and oversee accomplishment of objectives
• Managers are responsible for:
– Molding internal and external agreement on the organization’s purposes
and priorities
– Building support for the organization’s purposes and priorities among
internal and external stakeholders
– Striking a workable balance among members’/stakeholders’ economic,
professional, and public interests
– Negotiating and maintaining effective relationships
Leadership must instill a common vision of what the organization is to
accomplish, how it is to accomplished and stimulate determined and
widespread adherence to its plan.

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 Key Variable 3
Capabilities of Managers

Important qualities include:

– Basic management skills
– Communication
– Collaboration skills
– Conflict resolution
– Motivation
– Ability to develop shared cultures
– Coordination
– Possession of specific competencies

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 4. Evaluating

• Brings implementation full circle and can lead to new

rounds of policymaking
• Definition: Policy evaluation: systematically collecting,
analyzing, and using information to answer basic
questions about a policy, its effectiveness and efficiency,
and ensuring that those answers are supported by
evidence.

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 Types of Evaluations

• Process: assesses ongoing operations

• Outcome: results in specific outcomes, impact
• Formative: collects data for needed changes
• Summative: assesses results
• Cost-benefit: compares the relative costs to the benefits
• Cost-effectiveness: compares the relative costs to having
met its objectives

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 Timing of Evaluations

• Ex-ante policy evaluation: mainly influences agenda

setting
• Policy monitoring evaluation: helps ensure that policies
are implemented as designed and intended
• Ex-post policy evaluation: determines the real value of a
policy

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 Federal Entities Supporting Policy Evaluations
Two executive branch organizations and three legislative branch agencies
Executive Branch:
1. Agency for Healthcare Research and Quality (AHRQ)
– Produces evidence to make healthcare safer; higher quality; and more accessible, equitable,
affordable
2. Center for Medicare and Medicaid Innovation (CMMI)
– Tests new payment and service delivery models to reduce program expenditures for Medicare,
Medicaid, or CHIP beneficiaries
Legislative Branch Agencies:
3. Government Accountability Office (GAO)
– Congressional watchdog that provides timely, objective, and fair information
4. Congressional Budget Office (CBO)
– Provides Congress with the nonpartisan analyses needed for economic and budget decisions
5. Congressional Research Service (CRS)
– Provides Congress with information/analyses that would allow it to make more informed decisions

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 Summary
Policy Implementation

1. Designing
2. Rulemaking
3. Operating
4. Evaluating

Mainly an executive branch responsibility with oversight

from Congress and conflict resolution by the courts.
Stakeholders and Interest groups play an important role.

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