Health Reform Heads to the Courts

There was quite a bit of activity this week regarding the various legal challenges being brought by individual states and other stakeholder groups against the Patient Protection and Affordable Care Act. On Monday, Virginia Judge Henry Hudson ruled in favor of the Commonwealth of Virginia that the individual mandate provisions of PPACA are unconstitutional. The appeals process also began for the Thomas More Law Center’s challenge to PPACA. A federal judge upheld the constitutionality of PPACA in that case in October, but the Law Center appealed the decision and filed its appeals brief on Wednesday. Finally, yesterday, Judge Roger Vinson heard oral arguments on the challenge being offered in Florida by 20 state attorneys general and the National Federation of Independent Businesses.

In the Virginia ruling, Judge Hudson wrote “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to enter the stream of commerce by purchasing a commodity in the private market.” However, he declined to issue an injunction to prevent PPACA implementation from moving forward while the judicial process plays out, which means that for the time being, nothing with PPACA changes. Hudson’s ruling makes Virginia’s suit the first case where a portion of PPACA was deemed unconstitutional—thus far, judges in two other cases have upheld the law.
As expected, on Tuesday the Department of Justice said it is appealing the Virginia case, and while Virginia Attorney General Ken Cuccinelli tried to have the case fast-tracked and sent directly to the U.S. Supreme Court, that request was denied. Instead, experts predict that the legal actions against the legislation will take several years to resolve as the various challenges make their way through the federal appeals process, with one or more likely ending at the Supreme Court. In the Florida case, Judge Roger Vinson said that he will rule quickly, though that likely means mid-January, and that case will also certainly be appealed no matter what the ruling.

While some opponents of PPACA are cheering the advancements in court this week, many others view the rulings as a mixed blessing. PPACA does not have a severability clause, so some feel that if any portion of the law is ultimately found to be unconstitutional, the whole law could be struck down. However, recent federal Supreme Court rulings indicate that is a very unlikely outcome for PPACA. In recent years, a portion of the Sarbanes-Oxley Act, which regulates the accounting industry, was ruled unconstitutional, and despite the lack of a severability clause in that law, the remainder of its provisions are still in effect.

However, if the individual mandate provisions of the law are struck down, the insurance market reforms included in PPACA will be completely unworkable. Many, including NAHU, have expressed serious concerns that even with the weak individual mandate requirement in PPACA, the other insurance market reforms will have a significant negative impact on health insurance premiums, and the result could be a huge adverse selection problem causing severe damage to the private market. Virtually all insurance experts agree that without the individual mandate requirement, as weak as it is, drawing some healthy risks into the system, the results will be disastrous for risk-spreading in the private market, and alternative solutions will need to be crafted.

Another Day, Another Doc Fix

The House and Senate both acted this week to approve another one-year extension of the Medicare sustainable growth rate (SGR) calculation, to avoid a scheduled 25 percent cut in payments to Medicare-participating providers. The Senate passed the deal by unanimous consent and the House acted nearly unanimously, voting 409-2 in support of the measure. President Obama has already signaled his support for the bill, though he encouraged lawmakers to come up with a long-term fix.

The new “doc fix” bill uses $19.2 billion in PPACA funding to pay for the provider payments. The funding is drawn from PPACA subsidy funds, by increasing the amounts individuals who receive subsidies for which they are not actually eligible must repay. Under current law, when PPACA subsidies begin in 2014, if a person gets more of a subsidy than they’re eligible for, they’d have to repay no more than $250. Families would have to repay no more than $450. The new requirements raise those caps to between $600 and $3,500, depending on income. NAHU Dec 2010

Medicare Payment Fix: Lawmakers Seek To Reassure Physicians

The Hill (5/20, Pecquet) reports, "House Democrats are seeking to assuage doctors worried about looming cuts to Medicare rates. The effort comes one day after the American Medical Association declared its opposition to a proposed five-year fix to the payment system, which it said only serves to kick the problem down the road." On Wednesday, "Democrats...reiterated their support for a repeal, but view that as too expensive an option right now, given the $1.3 trillion budget deficit. Permanent repeal would add $250 billion to the nation's deficit with no corresponding spending cuts or tax increases." Notably, "sources on and off Capitol Hill...say the expansive package the House wants will not survive in the Senate."

CQ Today (5/20, Rubin, subscription required) points out that even if the Senate were to pass the measure, "the overall deal must be sold to the Democratic majorities in both chambers, many of whom are increasingly wary this campaign season about voting for a measure that would increase the deficit by as much as $170 billion." Meanwhile, "Democratic leaders, along with the chairmen of the tax-writing Senate Finance and House Ways and Means committees, continue to negotiate toward a bill, but the absence of a locked-in deal by Wednesday night increased the prospects that a House vote would not occur before next week."

Roll Call (5/20, Roth, subscription required) reports, "American Medical Association officials as well as lobbyists from doctors groups were summoned to a meeting in Speaker Nancy Pelosi's office at 5 p.m. Wednesday. In an e-mail from Wendell Primus, the California Democrat's senior policy adviser on budget and health issues, the participants were told they would receive an 'update on SGR," meaning "the sustainable growth rate formula to which doctors' Medicare payments are tied."
The Hill's (5/20, Pecquet) "On the Money" blog also reports that during the meeting, "medical associations and advocates for the elderly...were told they must strengthen their case." Notably, the "meeting was aimed at creating pressure to convince Republicans and recalcitrant Democrats worried about running up the deficit to vote for the fix, which under a House proposal would put off the payment cut for five years at a cost of $88.5 billion. One attendee told The Hill that the attendees were told to do all they can to put pressure on lawmakers 'because time is running out.'"

Health Care Reform Overview and Q&A 0510

As you know, President Obama signed into law H.R. 3590, the Patient Protection and Affordable Care Act. There's no doubt that the health care reform legislation will change things for all of us. The legislation has far-reaching implications which will be phased in during a multi-year implementation period beginning in the coming months.

How will enrollment periods be affected?
-For 2011 Plan Year, the Annual Election Period (AEP) remains the same, November 15-December 31, but the Open Enrollment Period (OEP) that normally runs from January 1 - March 31 will be replaced with the Annual Disenrollment Period (ADP). ADP will run from January 1 - February 15. During ADP Medicare Advantage members will only be allowed to disenroll from their Medicare Advantage plan back into traditional Medicare. In addition, if their disenrollment causes them to lose their prescription drug coverage, they will be allowed to select a new standalone Prescription Drug plan.

NOTE: Per the 2011 CMS Call Letter, AEP will also change for the 2012 Plan Year; the AEP will be October 15-December 7, 2011. AEP will actually be one week longer in 2011 for 2012 effectives.


What are some of the key changes that will take effect in the near-term?
-Closing the Medicare Part D coverage gap or "donut hole" --Many of our members with Part D or MAPD coverage already have some or the entire Part D coverage gap covered.
--A $250 rebate will be issued to each Part D member who reaches the Part D coverage gap in 2010. --Beginning in 2011, seniors will receive a discount for brand-name drugs while they are in the coverage gap. ---For brand-name drugs, pharmaceutical manufacturers are required to provide a 50% discount on prescriptions filled in the Medicare Part D coverage gap beginning in 2011 (in addition to federal subsidies of 25% of the brand-name drug cost by 2020, phased in beginning in 2013).
---For generic drugs, the law provides federal subsidies of 75% of the generic drug cost by 2020 for prescriptions filled in the Medicare Part D coverage gap (phase-in begins in 2011).

--The legislation also gradually phases down the beneficiary coinsurance rate in the Medicare Part D coverage gap from 100% to 25% by 2020


Preventive Services
-Cost-sharing for proven preventive services in Medicare are eliminated, so in 2011 preventive services will be covered 100% through Medicare. -Many of our members already have coverage for these preventive benefits with our plans.

Medicare Advantage program payments reduced
-Beginning in 2011, Medicare Advantage revenue reimbursement benchmarks are frozen for one year and then reduced in subsequent years; this may result in reduced benefits and/or increase member cost-sharing.

What are some of the key changes that will take effect in the long-term?
-Other, more comprehensive insurance reforms will begin in 2012. Many of the more significant changes to the Medicare marketplace - such as new payment methodologies, Part D revisions, new beneficiary enrollment periods and other changes - take effect between 2012 and 2017.

Many of the new laws require federal agencies to issue more detailed regulations that will guide implementation, and we will share more information when it is available.

Obama administration promises cannot deliver

Politico (5/12, Haberkorn) reports, "Republicans pounced on the news, which they called another sign that the Obama administration makes promises it cannot deliver." House Minority Leader John A Boehner (R-OH) said, "The American people wanted one thing above all from health care reform: lower costs, which Washington Democrats promised, but they did not deliver." In response, "a Democratic leadership aide on Capitol Hill said the Congress will have to stay within the budget." CNN (5/12) and CQ Today (5/12, Reichard, subscription required) also cover the story.

True cost to grow even higher

The Hill (5/12, Pecquet, subscription required) says that Energy and Commerce Republicans stated, "We can expect the true cost to grow even higher, since CBO noted this new estimate does not include 38 sections of grant programs, which cover 406 pages of legislation. ... While the Democrat authors of the law did not specify a funding level for these particular programs, they are certain to further increase spending." But, the "White House quickly responded to the latest figures from CBO by pointing out that the new estimates would need to be paid for and therefore do not affect the deficit." And, despite the new CBO figures, Office of Management and Budget Communications Director Kenneth Baer said that the healthcare law "will reduce the deficit by more than $100 billion in the first decade, and that will not change unless Congress acts to change it."

$115 billion more to government health care spending

The AP (5/12, Alonso-Zaldivar) reports, "President Barack Obama's new health care law could potentially add at least $115 billion more to government health care spending over the next 10 years, congressional budget referees said Tuesday. If Congress approves all the additional spending called for in the legislation, it would push the ten-year cost of the overhaul above $1 trillion -- an unofficial limit the Obama administration set early on." According to the CBO, "the added spending includes $10 billion to $20 billion in administrative costs to federal agencies carrying out the law, as well as $34 billion for community health centers and $39 billion for Indian health care."