Category Archives: Obamacare

Argument analysis: Working out the broader implications of a Medicaid suit

This is a copy of an article written by William Baude on SCOTUSblog.

In the article, William analyzes the oral arguments for Armstrong v. Exceptional Child Center, a very important Supreme Court case heard by the Justices January 20, 2015.  If you don’t recall the lawsuit, see my blog: “Low Medicaid Reimbursement Rates Violate the Supremacy Clause?!… The Supreme Court to Weigh In!

Here is the analysis:

The Supreme Court has heard a lot of preemption suits, but Tuesday’s arguments in Armstrong v. Exceptional Child Center suggest that the Court has not yet agreed on what exactly the formal underpinnings of those suits are.

The case features a debate about the intersection of two lines of precedent. One line restricts the availability of a federal statutory cause of action unless Congress has deliberately included one. The other line makes a cause of action broadly available when the plaintiff seeks an injunction to enforce a constitutional provision. At issue in this case is whether suits to enforce the preemptive effect of a federal statute are more like constitutional injunctions or statutory suits.

Both lines of precedent were on full display at yesterday’s argument. Shortly after his argument started the state’s counsel, Carl Withroe, was pressed with questions about the many prior preemption cases the Court had heard. Justice Ruth Bader Ginsburg adverted to a list of fifty-seven cases attached to the Medicaid recipients’ brief that are alleged to fail under the state’s theory. Withroe made several different attempts to distinguish those cases, although he did not seem to fully satisfy the Court. Towards the end of Withroe’s argument, Justice Anthony Kennedy asked “Did I miss something? … I thought you were going to give us a principled way to say why this case is different from our other preemption cases.”

Deputy Solicitor General Ed Kneedler took the podium next, attempting to supply that principled basis. He argued that Spending Clause legislation, and Medicaid specifically, was different from the usual preemption case for reasons rooted in the history of equity practice. Traditional equitable remedies, he said, could vindicate a person’s “liberty,” “property,” or “business,” but Medicaid was none of those things because it was a spending program created by a cooperative agreement with the state. Once again, Justice Kennedy chimed in at the end of Kneedler’s time to question whether his theory really distinguished one of the Court’s prior cases, American Trucking Associations v. City of Los Angeles.

Representing the Medicaid recipients, attorney James Piotrowski also faced skepticism about the implications of his position, and seemed to embrace them more than to distinguish them. He openly conceded that his clients would not have a right to sue under the Court’s statutory cause of action cases or under Section 1983. But the Supremacy Clause suit, he stressed, would seek only the narrow remedy of an injunction.

Justice Samuel Alito asked Piotrowksi whether his argument implied that someone could challenge a state’s decision to legalize marijuana as preempted by federal drug laws. Yes, Piotrowksi agreed, so long as Article III standing was satisfied, there would indeed be a cause of action. (Though Justice Alito did not specifically mention a suit by a state, the question might have been inspired by the recent marijuana preemption lawsuit filed in the Supreme Court’s original jurisdiction by two states — Oklahoma and Nebraska.)

And when Chief Justice John Roberts suggested to Piotrowski that his position would open “the courthouse door to everybody who says that federal law was not followed,” Piotrowski agreed: “Yes, your honor, that’s right. We open the courthouse doors.”

At the same time, Piotrowski also conceded that Congress could expressly preclude a preemption suit if it spoke clearly. The key, he argued, is that Congress’s decision not to create a statutory cause of action was not the same as a congressional decision to prohibit a cause of action that came from other background legal principles. Justice Kennedy did not ask Piotrowski any questions.

Lest this abbreviated summary make it seem like argument followed a clear path, I should say that there were also plenty of side points raised throughout. There were questions about how the state’s reimbursement rates related to its formula, a question from Justice Elena Kagan about why nobody from the federal Department of Health and Human Services had signed the federal government’s amicus brief, a response from Chief Justice Roberts about whether DHS was just trying to help the health-care sector “get a bigger chunk of the federal budget,” and a series of questions from Justice Stephen Breyer about the doctrine of “primary jurisdiction,” including a nostalgic reminiscence about the Civil Aeronautics Board “of blessed memory.” But the Justices also constantly reminded one another that the question was whether the suit could be brought, not whether it should prevail.

Four Justices have already answered that question in their dissent three years ago in Douglas v. Independent Living Center. Over the next few months, we will see if they have persuaded any of their colleagues to join them.

Low Medicaid Reimbursement Rates Violate the Supremacy Clause?! …The Supreme Court to Weigh In!

Tomorrow is a big day.  Not only will most of us return to work after a long weekend, but the Supreme Court will hear oral arguments on a very important issue.

On January 20, 2015, (tomorrow) the Supreme Court of the United States will hear oral arguments on a very important issue that will affect every health care provider in America who accepts Medicaid, and, yet, there has been very little media coverage over this lawsuit.

Legal Issue: Does a Medicaid provider have a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.

The Issue Translated from Legalese to English: Can a Medicaid provider sue the state in which the provider does business if the provider believes that the Medicaid reimbursement rate for a particular service or product is too low? For example, can a dentist sue NC for a higher Medicaid reimbursement rate for tooth extractions? Can a long-term care facility and/or a home care agency sue due to low Medicaid personal care services (PCS) rates?

It is my opinion that Medicaid providers across the country have not brought enough lawsuits demanding higher Medicaid reimbursement rates. It is without question that Medicaid reimbursement rates across the country are too low. Low reimbursement rates cause health care providers to refuse to accept Medicaid recipients. See my blog NC Health Care Providers Who Accept Medicaid: Thank you!.

If you hold a Medicaid card, you do not automatically have access to good quality health care. You are segregated from the privately insured and the care you receive is not equal. You are limited in your choice of doctors. If you are an adult, you can forget any dental procedures. Even if you aren’t an adult, you require prior approval for almost all services (regardless of whether you are suffering from pain), which will often be denied (or reduced…or require a significant waiting period). You want mental health care? You better get the very least amount of help possible until you prove you need more help. See my blog NC Medicaid Expansion: Bad for the Poor.

And why won’t more health care providers accept Medicaid? The Medicaid reimbursement rates are too low!! The Medicaid reimbursement rates are too low for health care providers to yield a profit…or, in many instances, even cover the overhead. In fact, providers tell me that when they do accept Medicaid, they are forced to accept more privately insured patients to offset the losses from accepting the finite number of Medicaid patients. In many states, the states refuse to cover psychology costs for Medicaid recipients, and other states refuse to cover the costs for PCS.

So, I say, bring on the lawsuits!!! Force states to increase Medicaid reimbursement rates!!

For example, in obstetrics, if the national Medicaid reimbursement rate for ob/gyn visits is $1.00, here, in NC, we reimburse ob/gyns 88¢. Which is why only 34% of North Carolina ob/gyns accept Medicaid.  See Kaiser.

So far, across the country, federal courts have held that Medicaid providers do have a private right of action to sue states for low reimbursement rates. In fact, in most cases, the providers have PREVAILED and the states have been forced to pay higher rates!!!

Providers of all types have filed lawsuits across the country disputing the states’ Medicaid reimbursement rates as being too low. For example, in California, between April 2008 and April 2009, five lawsuits were filed against the state of California to stop scheduled reductions in reimbursement rates (on behalf of rehabilitation providers, nonemergency medical transportation providers, pharmacies, physicians, and emergency physicians).

A Florida lawsuit that was settled in December 2014 revolved around a young boy on Medicaid who was suffering from a painful sinus infection. His mother contacted multiple physicians and was denied appointments because the mother and her son were on Medicaid. He was forced to wait almost a week for an appointment. The judge in the case wrote, “I conclude that Florida’s Medicaid program has not compensated primary physicians or specialists at a competitive rate as compared with either that of Medicare or private insurance payers….I further conclude that Florida’s structure for setting physician reimbursement fails to account for statutorily mandated factors in the Medicaid Act, including the level of compensation needed to assure an adequate supply of physicians.”

Over the years, the Supreme Court has vacillated over even determining whether a Medicaid provider has a private right of action under the Medicaid Act to bring a lawsuit against states under the Supremacy clause.

In 2002, the Supreme Court denied certiorari (refused to hear the argument) on this very issue. Coming out of the 9th Circuit (which includes California), a Circuit which has been especially busy with lawsuits arguing Medicaid reimbursement rates are too low, the case of Independent Living Center of California v. Shewry would have squarely addressed this issue. But the Supreme Court denied certiorari and did not hear arguments.

In 2012, the Supreme Court decided to hear arguments on this issue. In Douglas v. Independent Living Center, Medicaid beneficiaries and providers sued the California state Medicaid agency, seeking to enjoin a number of proposed provider payment rate cuts. After the Supreme Court heard oral argument, but before it had issued its decision, the Centers of Medicare and Medicaid Services (CMS) approved California’s state plan amendment containing the rate cuts. Consequently, the Douglas majority held that the case should be sent back to the lower courts to consider the effect of CMS’s approval of the state plan amendment, without deciding whether the beneficiaries and providers had a right to sue.

Now the case Armstrong v. Exceptional Child Center will be heard by the Supreme Court on January 20, 2015.

How did this case come about?

In 2005, the Idaho state legislature passed a law requiring the state Medicaid agency to implement a new methodology to determine provider reimbursement rates, and in 2009, the state Medicaid agency published new, higher rates based, in part, on a study of provider costs. CMS approved the state’s new methodology. However, the new rates never were implemented because the state legislature failed to appropriate sufficient funding, making the refusal to increase the reimbursment rate a budgetary issue.  A group of Idaho residential habilitation providers that accept Medicaid sued the Idaho state Medicaid agency and alleged that the state’s failure to implement the new rates conflicted with federal law (the Supremacy Clause).

Section (30)(A) of the Medicaid Act requires state Medicaid agencies to take provider costs into account when setting reimbursement rates. Under case law precedent, the rate must “bear a reasonable relationship to efficient and economical . . . costs of providing quality services.” To deviate from this standard of reasonableness, a state must justify its decisions with more than budgetary reasons.

The argument is that the state’s low reimbursement rate for X service, is too low to provide good quality services and that the low rates were set for purely budgetary reasons.

Once you prove that the reimbursement rates are too low to expect good quality care (which would be fairly easy for almost all Medicaid services in NC), then you argue that the state’s reimbursement rates violate the Supremacy Clause because the federal law requires good quality care.

What is the Supremacy Clause?

The Supremacy Clause can be found in Article VI, Paragraph 2 of the U. S. Constitution. Basically, it establishes that federal law trumps conflicting state laws , even state constitutional provisions, on matters within the Constitution’s grant of powers to the federal government – such as Medicaid..

In this case, we are talking about a state’s Medicaid reimbursement rate violating the federal law requiring that the rate must bear a reasonable relationship to quality of care.

This is not a small matter.

After all is said and done, the Armstrong case, which will be heard by the Supreme Court tomorrow, will be extraordinarily important for Medicaid health care providers. I believe it is obvious which way I hope the Supreme Court decides…in favor of providers!! In favor of a ruling that states are not allowed to underpay health care providers only because the patient holds a Medicaid card.

My wish is that Medicaid providers across the country bring lawsuits against their state to increase Medicaid reimbursement rates…that the providers prevail…that more health care providers accept Medicaid…and that more Medicaid recipients receive quality health care.

Is that too much to ask?

The Supreme Court will most likely publish its opinion this summer.

Its decision could have an extreme impact on both Medicaid providers and recipients.  Higher Medicaid reimbursement rates would increase the number of physicians willing to accept Mediaid, which, in turn, would provide more access to care for Medicaid recipients.

Keep in mind, however, the issue before the Supreme Court in Armstrong is narrow.  If, for whatever reason, the Supreme Court decides that Medicaid providers do not have a private right to sue under the Supremacy Clause…all is not lost!!! There is more than one way to skin a cat.

Medicare chief Tavenner stepping down; oversaw rocky health care rollout

News Alert: Medicare Chief Tavenner stepping down!!!! 

Here is the article:

WASHINGTON — Medicare chief Marilyn Tavenner — who oversaw the rocky rollout of the president’s health care law — says she’s stepping down at the end of February.
In an email Friday to staff at the Centers for Medicare and Medicaid Services, Tavenner, a former Virginia health secretary and hospital executive, said she’s leaving with “sadness and mixed emotions.”

Tavenner survived the 2013 technology meltdown of HealthCare.gov, but was embarrassed last fall when she testified to Congress that 7.3 million people were enrolled for coverage. That turned out to be an overcount that exaggerated the total by about 400,000.

Calling Tavenner “one of our most esteemed and accomplished colleagues,” Health and Human Services Secrerary Sylvia M. Burwell said the decision to leave was Tavenner’s.
Principal deputy administrator Andy Slavitt will take over as acting administrator.

Lordy, Lordy, Look Who’s Forty: A Review of Our 40-Year-Old Stalemate in Health Care Reform

40-birthday

Well, folks, it is official.  I am “over the hill.”  Yup.  My birthday is today, January 7, 1975, and I was born 40 years ago.

Instead of moping around, I have decided to embrace my 40s. For starters, let’s take a look at where we were 40 years ago. Obviously, personally, I was in utero. But what about the country? What about health care?

Not surprisingly, even 40 years ago, politicians were discussing the same issues with health care as we are now. Some things never change…or do they???

In my “40 years in review” blog, I want to discuss why we, as a nation, are still arguing about the same health care issues that we were arguing about 40 years ago.  And, perhaps, the reason why we have been in a 40-year-old stalemate in health care reform.

Today, we have a diverged nation when it comes to health care. Democrats want to expand public health insurance (i.e., Medicaid) and tend to favor a higher degree of government oversight of health care to ensure that health care is available to all people.  Republicans, on the other hand, believe that the financial burden of the Affordable Care Act (ACA) on the federal and state level is unsustainable, and people will receive less than adequate health care. Republicans tend to favor privatization of Medicaid, while liberals oppose such ideas.

Health care reform has been a hot topic for over 40 years…with some interesting differences…

Going back to 1975…

Gerald Ford, a Republican, was our nation’s president, and we were in a nationwide recession.

Under Ford, the American Medical Society (AMA) proposed a new plan for health care, an employer mandate proposal.

According to a 1975 Chicago Tribune journalist, the AMA’s new proposal pushed for a broader government role in health care.  See below.

“The new [ ] plan would cover both employees and the unemployed, along with poor people and those considered uninsurable because of medical or mental problems.  It would require employers to subsidize health care for employees and their families and pay at least 65 % of each premium.  It would also require the government to provide partially subsidized health insurance, financed from general revenues, for the poor and the unemployed. It calls for medical insurance benefits covering 365 days of hospital care during any one year, 100 days of nursing home care, and home health, mental, and dental service for children aged 2 and up.  All but the poorest beneficiaries would share premium costs and would pay 20 per cent for the services provided, but no individual would pay more than $1,500 a year and no family more than $2,000 a year for health care.”

Chicago Tribune, “The A.M.A.’s subsidy plan” April 19, 1975 (emphasis added) (no author was cited).

Interestingly, in that same newspaper from April 19, 1975, advertisements show towels for $1.89, pants for teenagers for $4.99, a swivel rocker for $88, and a BBQ grill for $12.88. My how times have changed!

Those prices also indicate how much buying power was involved with the AMA’s proposal, and what it meant to suggest that an individual might have to pay up to $1,500 a year, and a family up to $2,000 a year, for health care – a lot of money back then!

In 1976, Pres. Ford proposed adding catastrophic coverage to Medicare, offset by increased cost sharing.  These are examples of Pres. Ford (a Republican) creating more government involvement in health care and expanding health care to everyone.

After Pres. Ford, came Pres. Jimmy Carter from 1977-1981, a Democrat.

Pres. Carter campaigned on the notion of “universal health care for everyone;” however, once in office he decided instead to rein in costs, and not expand coverage.  In the prior decade (1960), the consumer price index had increased by 79.7%, while hospital costs had risen 237%.  President Carter proposed an across-the-board cap on hospital charges that would limit annual increases to 1.5 times any rise in the consumer price index.

Pres. Carter was also quoted from public speeches saying, “We must clean up the disgraceful Medicaid scandals.”

Pres. Carter’s stance on “universal” health care was: “that such a program would be financed through both the employer and the payroll taxes, as well as general revenue taxes. Patients would still be free to choose their own physician, but the federal government would set doctor’s fees and establish controls to monitor the cost and quality of health care.”

In May 1979, Senator Ted Kennedy, a Democrat, proposed a new universal national health insurance bill—offering a choice of competing federally-regulated private health insurance plans with no cost sharing financed by income-based premiums via an employer mandate and individual mandate, replacement of Medicaid by government payment of premiums to private insurers, and enhancement of Medicare by adding prescription drug coverage and eliminating premiums and cost sharing.

These are examples of Democrats, Pres. Carter, by not expanding health care coverage and reining in costs, and Sen. Kennedy, by proposing privatization of Medicaid, acting in a more conservative nature, or, as a conservative nature would be perceived today.

So when did the parties flip-flop? Why did the parties flip-flop? And the most important question…if we have been struggling with the exact same issues on health care for over 40 years, why has our health care system not been fixed?  There has certainly been enough time, ideas, and proposed bills.

While I do not profess to know the answer, my personal opinion is the severe and debilitating polarizations of the two main political parties have rendered this country into a 40-year-old stalemate when it comes to health care reform and are the reason why the solution has not been adopted and put into practice.

Maybe back in 1979, when Senator Kennedy proposed replacing Medicaid with private insurance, Republicans refused to agree, simply because a Democrat proposed the legislation.

Today when Republican candidates campaign on privatizing Medicaid and the Democrats vehemently oppose such action, maybe the opposition is not to the idea, but to the party making the proposal.

Just a thought…

And here’s to the next 40!!!

AZ Supreme Court Holds AZ Legislators Have Standing to Challenge AZ Law, But Media Mischaracterizing the Lawsuit

You know the old adage, “Believe none of what you hear, and only half of what you see?” –Benjamin Franklin.

Well the old adage still holds true, especially when it comes to journalists and the media interpreting and reporting on lawsuits that deal with Medicaid laws, and which, perhaps, only an infinitesimal, ancillary aspect may touch the issue of Medicaid expansion.

Even if the lawsuit will not impact Medicaid expansion, journalists and the media hype the lawsuits as “conservatives challenging Obamacare yet again,” which mischaracterizes the actual lawsuit.

It seems that the media have become so accustomed to polarizing the topic of Medicaid expansion that reporters seem incapable of truly assessing the issues objectively and reporting accordingly.  This has happened recently when the AZ Supreme Court rendered a decision December 31, 2014, regarding legal standing, not the constitutionality of Medicaid expansion as many journalists report.  Biggs, et al. v. Hon. Cooper, et al.

The Arizona Supreme Court only decided that 36 legislators have the legal standing to challenge the passage of House Bill 2010, which was signed into law as A.R.S. § 36-2901.08.

What is A.R.S. § 36-2901.08?

For starters, A.R.S. stands for Arizona Revised Statutes (ARS). For those of you who missed “Schoolhouse Rock” as a child, a statute is a law that is enacted by the legislative body and which governs the state. Statutes are considered “black letter law” and should be interpreted on their face value and plain meaning.

The content of 36-2901.08 allows the State of Arizona to expand Medicaid.  In addition to expanding Medicaid, 35-2901.08 assesses a levy on hospitals to aid in funding the expansion of Medicaid.

36 Arizona legislators voted against 36-2901.08. It passed by a simple majority and was signed into law. The 36 legislators, who voted against the bill, brought a lawsuit to enjoin the statute from being applied or enacted. The State of Arizona’s position is that the 36 legislators lack the legal standing to bring the lawsuit.

Here are the issues in the legislators’ case, BIGGS ET AL. v. HON. COOPER ET AL.:

1. Do the 36 legislators have the standing to bring an injunctive action enjoining Arizona from carrying out 36-2901.08?

2. If the answer to #1 is yes, then have the 36 legislators proven that 36-2901.08 was passed in violation of the AZ Constitution?

I’ve read a number of articles from journalists covering this matter who mischaracterize the Biggs lawsuit as a lawsuit brought by the Arizona legislators, predominantly Republicans, asking the Arizona Supreme Court to strike statute 36-2901.08 because the expansion of Medicaid is unconstitutional, or “challenging Governor Jan Brewer’s Medicaid expansion plan,” or “challenging the legality of the state’s Medicaid expansion…”

These journalists are mischaracterizing the Arizona Supreme Court’s opinion.  And I am not talking about journalists for small, local papers are making these mistakes…the above quotations are from “The New York Times” and “The Associated Press.”

So, let’s discuss the true, correct ramifications of the Arizona Supreme Court opinion in Biggs

First, the Biggs opinion does not hold that Medicaid expansion in Arizona or elsewhere is unconstitutional…nor does it decide whether Medicaid expansion in Arizona is invalid on its face.

The opinion, rendered December 31, 2014, only holds that the 36 legislators have the legal standing to bring the lawsuit…there is no holding as to constitutionality of Medicaid expansion, despite so many journalists across America stating it so.

What is standing?

Standing, or locus standi, is the capacity of a party to bring suit in court.  This is not a question of whether a person is physically capable of bringing a lawsuit, but whether the person prove that he or she has sustained or will sustain a direct injury or harm and that the harm is redressable (or can be fixed or set right by the lawsuit).

The issue on the Supreme Court level in Arizona is only the narrow issue of whether the 36 legislators have standing. Period.

The Arizona Supreme Court held that the 36 legislators do possess the requisite legal standing in order to bring the lawsuit.

Now, the case will be remanded (sent to a lower court), in this instance, to the Superior Court, for a new fact-finding trial now that the issue of standing has been resolved.  In other words, at the lower superior court level, the ref (judge) made a call that the football players on the team (36 legislators) were ineligible to play NCAA football (poor grades, were red-shirted last year), and the alleged ineligible players appealed the decision all the way up.  Now the NCAA (AZ Supreme Court) has determined that the players are eligible and the game will resume.

Again, despite the rhetoric put forth by numerous widespread journalists, the 36 legislators are not merely challenging Arizona Medicaid expansion on its face.

Instead, the Arizona Constitution requires that certain Acts that increase state revenues must pass the legislature by a supermajority vote. See Ariz. Const. art. 9, § 22(A).

Remember from the beginning of this blog that 36-2901.08 was passed by a simple majority.

The 36 legislators argue that the assessment of a levy on Arizona hospitals constitute an Act that requires a supermajority vote, which, obviously would require more than a straight 50% approval.

So the 36 legislators’ lawsuit in AZ is about whether 36-2901.08 needs a supermajority or simple majority to vote it into law.

Not whether Medicaid expansion is constitutional.

Believe none of what you hear, and only half of what you see…especially when it comes to journalists and media reporting on lawsuits regarding Medicaid rules and regulations.

Supreme Court Will Decide Whether Citizens in NC and 26 Other States Can Receive Tax Credits for Health Care Premiums!!

With a decision that, I can only imagine, ricocheted against the White House walls, the Supreme Court granted certiorari to hear King v. Burwell this past Friday, November 7, 2014, despite Obama’s administration’s request for the Supreme Court to postpone granting certiorari in order to wait for a D.C. circuit to re-visit an opinion, the Halbig ruling.

The Supreme Court’s decision in King could, potentially, have devastating consequences on the Affordable Care Act (ACA). However, I write that last sentence with an asterisk. Journalists across the country are entitling articles, “Obamacare Is Doomed! Everybody Panic!”, “The Supreme Court Might Gut Obamacare. Your State Could Save It,” and “Obamacare vs. Supreme Court.” These titles to articles are misleading, at best, and factually incorrect, at worst. King v. Burwell is actually not an attack on the ACA. But I will explain later…

First of all, what the heck is certiorari…or “cert”, as many attorneys call it?

A writ of certiorari is actually an order from a higher court to a lower court demanding a record in a case so that the higher court may review the lower court’s decision. A writ of certiorari is the instrument most used by the Supreme Court to review cases. The Supreme Court hears such a small, minute fraction of lawsuits that when the Supreme Court “grants cert,” it is a big deal.

I have written in the past about these same two appellate court cases, which were both published July 22, 2014, within hours of one another, regarding the Health Care Premium Subsidies Section of the Affordable Care Act. These two cases yield polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.

Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”

So the two cases came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.

Well, for everyone else, that is as clear….as mud.

When the D.C. court decided Halbig, it was not an en banc decision. In English, this means that the entire bench of judges in the D. C. Circuit did not hear the case, only a panel of three (which is the usual way for a case to be heard on appeal to a federal circuit). The Obama administration, along with other proponents of the ACA, hoped that the U.S. Supreme Court would deny cert to King until the D.C. court could re-visit its decision, this time en banc.

Yet, this past Friday, the Supreme Court opted to consider King v. Burwell.

The sole issue to be decided is: Whether the Internal Revenue Service may permissibly promulgate regulations to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government under Section 1321 of the Patient Protection and Affordable Care Act.

How is King v. Burwell NOT an attack on the ACA?

The plaintiffs in King are not asking the Supreme Court to strike down the ACA, even, in part. They are asking the Court to uphold the plain language of the ACA by holding that the IRS’s interpretation of the ACA is erroneous. Let me explain…

Section 1311 directs states to establish exchanges, and Section 1321 directs the federal government to establish exchanges “within” any state that opts to not set up its own state-run exchange, e.g., NC.

Section 1401 authorizes subsidies for people whose household income falls between 100 and 400% of the federal poverty level, who are not eligible for qualified employer coverage or other government programs, and who enroll in coverage “through an Exchange established by the State.” (emphasis added). These 3 criteria are crystal clear based on the plain language of the statute.

The statute makes no provision for subsidies in states that opt not to create their own exchange but, instead, allow the federal government to create an exchange within its state.

The ACA was intended to create penalties if the states do not establish their own exchanges. For example, the subsidies are not allowed to citizens of states without state-created exchanges.

In August 2011, the IRS issued a proposed rule [add link] announcing it would provide tax credits (and implement the resulting penalties) in states with federal exchanges, too. IRS officials later admitted to Congress that they knew the statute did not authorize them to issue tax credits through federal exchanges…Oops…

The proposed rule received much negative feedback based on the fact that the IRS appeared to have no statutory basis for the rule. Nonetheless, the proposed rule was finalized in May 2012, and lawsuits ensued…

Oklahoma began the litigation with Pruitt v. Burwell in September 2012. In September 2014, a federal district court held that the plain language of the ACA does not allow subsidies in states with federally-run exchanges. In May 2013, Halbig v. Burwell was filed, and in September 2013, King v. Burwell was filed.

So, much to the contrary of popular belief, these lawsuits are not “against the ACA” or “proving the unconstitutionality of the ACA.” Instead, these lawsuits are “against” the IRS interpreting the ACA to allow tax credits for all states, even if the state has a federally-run exchange.

Will it negatively impact the ACA if the plaintiffs win? That would be a resounding yes.

Oral argument could be as soon as March 2015.

Williams Mullen Hosts Its First Annual Healthcare Panel Discussion: Summary Below

I am currently sitting in a hotel in New Mexico.  I testified this morning before the New Mexico Behavioral Health Care Subcommittee regarding due process for health care providers upon “credible allegations of fraud.”

This past Sunday I ran and finished my very first half marathon.  And, yes, I am sore.  I signed up for the Bull City 1/2 marathon in Durham because it was being held in October and I thought the temperature would be cool.  But I failed to contemplate Durham’s hills…ouch!

Despite my jet lag and sore muscles, I wanted to blog about the health care panel discussion this past Thursday night hosted by Williams Mullen. Representative Nelson Dollar, Barbara Morales Burke, Blue Cross Blue Shield of NC, Stephen Keene, General Counsel for the NC Medical Society, and I presented as the healthcare panel.  As you can see below, we sat in the above-referenced order.

Panel4

with moderator

Below, I have outlined the questions presented and my personal recollection of each answer.  These answers were not recorded, so, if, by chance, I misquote someone, it is my own personal recollection’s fault, and I apologize.

Our Williams Mullen associate Robert Shaw, acted as the moderator and asked the following questions:

To Rep. Dollar:

Most of us have heard about the discussion in the General Assembly about moving North Carolina’s Medicaid program towards a more fully implemented managed care model or to one using accountable care organizations. Where do the House and Senate currently stand with respect to these models, and what are the prospects for passing Medicaid reform in next year’s long session of the General Assembly?

Summary: The House and the Senate are not in agreement.  The House put forth a Bill 1181 last session that encompasses the House’s ideas for Medicaid reform.  It was a bipartisan bill.  It was passed unanimously.  Medicaid reform should not be a bipartisan matter.  Our Bill did not fare well in the Senate, but the House believes Bill 1181 is the best we have so far.

To which Keene interjected: It is important that Bill 1181 was unanimous. The Medical Society endorses the bill. 

To Barbara Morales Burke:

As we head into open enrollment season under the Affordable Care Act, what are the biggest challenges you see from the insurer’s perspective in complying with Affordable Care Act requirements and meeting the needs of the marketplace?

Summary: BCBS, as all other insurance companies, faced unique times last year during the open enrollment and this year will be even more important because we will find out who will re-new the policies.  While BCBS was not perfect during last year’s open enrollment, we have learned from the mistakes and are ready for the upcoming enrollment.

To Steve Keene:

What concerns are you seeing from members of the North Carolina Medical Society regarding patients’ access to providers of their choice and your members’ participation in the major health insurance networks?

Summary: This has always an issue since he came to NC. He actually wrote a memo regarding the access to provider issue back in the 1990s.  The insurance need to come up with a known a published standard. BCBS actually has better relationships with providers than, say, for example, a United Healthcare.  If the insurance company decides to only use X number of ob/gyns, then it should be clear why the insurance company is only contracting with x number ob/gyns.

To Knicole Emanuel:

Under the Affordable Care Act, the standard for withholding payments in the event of a credible allegation of fraud has changed. What is the standard for a credible allegation of fraud and how does such an allegation affect Medicaid reimbursements?

Summary: The ACA was intended to be self-funding.  In drafting the ACA, 42 CFR 455.23 was amended from allowing states to choose whether to suspend Medicaid reimbursements upon credible allegations of fraud to mandating the states to suspend payments.  The basis for a suspension is credible allegations of fraud and only requires an indicia of reliability.  This indicia of reliability is an extremely low standard and, thus, adversely impacts health care providers who are accused of fraud without a basis, such as a disgruntled employee or anonymous and unfounded complaint.  

For more information on suspension of Medicaid payments, please see my blogs: “How the ACA Has Redefined the Threshold for “Credible Allegations of Fraud” and Does It Violate Due Process?” or “NC Medicaid Providers: “Credible Allegations of Fraud?” YOU ARE GUILTY UNTIL PROVEN INNOCENT!

To Keene and Burke: (ACA topic)

One of the concerns, or perhaps benefits depending on one’s perspective, about the implementation of the Affordable Care Act is the possible transition from our country’s employer-based health insurance model. Are you seeing any trends away from the employer-based health insurance model, or do you expect such a trend in the future?

Summary: (From Keene) He sees the employer-based health insurance model as a tax issue.  Employer-based health insurance is not going anywhere unless the related tax break is eliminated.  Keene does not have an opinion as to whether the employer-based health insurance model is good or bad; he just believes that it is not going anywhere.  On a side note, Keene mentioned that, with employer-based health insurance, the employee has a much smaller voice when it comes to negotiating any terms of the health insurance.  The employee is basically at the whim of the employer and health insurance company.

Dollar and Emanuel: (Medicaid reform)

Who are the major contributors to the legislative discussion on Medicaid funding and reimbursement rates? What stakeholders do legislators want or need to hear from more to make sound policy decisions about funding decisions?

Summary: (From Dollar) It is without question that the legislators are surrounded by lobbyists regarding the discussion as to Medicaid funding and reimbursement rates.  I stated that the reimbursement rates are too low and are a direct correlation as to quality of care.  Rep. Dollar stated that he is open to hearing from all.  Furthermore, Rep. Dollar believes that the Senate Bill on Medicaid reform is a good start for Medicaid reform. The Bill implements the Accountable Care Organizations (ACOs), and is supported by the NC Medical Society.

Summary: (From me) I support Medicaid reform that eliminates the MCOs in behavioral health care.  These MCOs are prepaid and have all the financial incentive to deny services and terminate providers.

Burke: (ACO)

How is Blue Cross Blue Shield of North Carolina working with providers to take advantage of the new Medicare Shared Savings Program? (E.g., partnership signed with WakeMed Key Community Care (an accountable care organization) in July.)

Summary: BCBS works very hard to maintain solid relationships with providers.  To which Keene agreed and stated that other private insurance does not.

The health care panel was great.  We hope to host a State of the State on Health Care panel discussion annually.

Haven’t Fixed Medicaid Yet…But I Haven’t Gotten Bucked Off Yet

There are a number of federal regulations that, if I were in charge, would be immediately amended. Obviously, I am not in charge, so despite my best blogging efforts, my blogs do not change federal law. Today, however, I had the honor and privilege to speak to someone who may have the clout and political pull to fix some of the calamities found in the Code of Federal Regulations (CFRs) that are so detrimental to health care providers who accept Medicare and Medicaid across the country.

My husband, daughter, and I ride horses nearly every weekend. We ride Western and on trails all over North Carolina and Virginia, mostly on charity rides. And over the past few years, I have, sadly, gone through over 5 horses. Not because the horses have passed. But because each horse had an oddity or behavior issue that either (a) I didn’t want to deal with; or (2) terrified me.

For example, Twist of Luck (Twist) is a gorgeous pure, white horse with a yellow tail and mane and brilliant, blue eyes. But he was what you call, “proud cut.” Meaning that because he sired so many foals, even after he became a gelding he thought like a stallion. One weekend we were at Uwharrie National Park and when I saddled up Twist and mounted him, he decided that he did not want me on his back. My husband said Twist looked like a “poster horse” for a rodeo with his back completely rounded like an angry cat and all four of his hooves in the air. Needless to say, I found myself quite quickly on the ground with a sore tooshie, and Twist found himself sold.

Since I do not have the time to actually train my horse, I need a trained horse.

With my hobby of horseback riding, a well-trained horse is imperative…not only for safety, but for my enjoyment as well.

In the area of Medicare and Medicaid, it is imperative for enough physicians, dentists, and other health care providers to accept Medicare and Medicaid. You see, health care providers choose to accept Medicare and Medicaid. And not all health care providers agree to accept Medicare or Medicaid. But it is important for enough health care providers to accept Medicare and Medicaid patients otherwise the Medicare or Medicaid card in a person’s hand is worthless. Same as Twist was worthless to me that day in Uwharrie. If you can’t ride a horse, what is the point of owning it? If you can’t find a health care provider, what is the use of having coverage?

Here in North Carolina, we decided to not expand Medicaid. This blog is not going to address the ever-growing discontent in the media as to the decision, although you can see my blog: “Medicaid Expansion: Bad for the Poor.”

Instead, this blog will address my idea that I pitched to Congresswoman Renee Ellmers over lunch last week and discussed today with her legislative counsel today as to how it can be implemented.

Here’s my idea:

According to most data, not expanding Medicaid in North Carolina is affecting approximately 1.6 million uninsured North Carolinians. But to my point of the shortage of health care providers accepting Medicaid, what is the point of having an insurance card that no health care provider accepts? Therefore, I propose a pilot program here in NC…a pilot program to help the approximate 1.6 million uninsured in NC. Besides the moral issue that everyone deserves quality health care, fiscally, it is sound to provide the uninsured with quality health care (notice that I did not say to provide the uninsured with Medicaid). When the uninsured go to emergency rooms it costs the taxpayers more than if the uninsured had an insurance policy that would allow primary care and specialty doctor appointments. But with Medicaid…you can count out most specialty care, even some basic necessary care like dental care.

Most of the uninsured in NC are non-disabled men. I say this because it is usually easier to get a child on Medicaid with the Early, Periodic, Screening, Diagnostic, Testing (EPSDT) laws. See my blog: “How EPSDT Allows Medicaid Recipients Under the Age of 21 To Receive More Services Than Covered by the State Plan” for an explanation of EPSDT. Many women receive Medicaid based on having dependent children. “In most states, adults without dependent children are ineligible for Medicaid, regardless of their income, and income limits for parents were very low—often below half the poverty level.” See Kaiser Foundation. Which means, generally, many of our uninsured are men without dependents. However, that does not mean they are not fathers. Many of the uninsured are fathers.

Two-thirds of the uninsured live in families where there is at least one full-time worker. However, the percentage of uninsured who live in families with no workers, part-time workers and only one full-time worker has increased 12 percentage points over 5 years. See Demographics.

So how do we help the uninsured without merely handing all uninsured a Medicaid card that will not give them quality health care because not enough trained health care providers accept Medicaid patients?

By giving the uninsured health care insurance, of course! But not Medicaid coverage…oh, no! By giving the uninsured private insurance that will be accepted by all health care providers, all specialists, all durable medical equipment companies, all dentists…

We could partner up with a larger insurer like Blue Cross Blue Shield (BCBS) and create a premium health care insurance on which the insured would pay no premiums or co-pays. Instead, federal grant money would cover the premiums. All that money that NC did not receive based on our decision to not expand Medicaid…can go toward this pilot program to purchase the private insurance for the uninsured.

In order to qualify for this premium, free, private insurance the person must:

1. Be a legal resident;
2. NOT qualify for Medicaid; and
3. Maintain a part time job.

The reasoning behind the criterion of maintaining a part-time job is simple.

It is indisputable that the Affordable Care Act (ACA) has motivated employers across America to decrease the number of full-time jobs due to the mandatory expense of employers providing health care to full-time employees.

Obviously, part-time work does not pay well. It is difficult to even maintain a living on part-time work’s low hourly wages. Many people are forced to hold down two-part time jobs in order to survive. If you can not work and receive more government hand outs, what is the incentive to work?

If my idea comes to fruition and many of our uninsured carry a private insurance card and receive quality health care from the providers of their choice, we could create a whole new group of North Carolinians not only contributing to the community by working, but also contributing to their own homes, and improving themselves and those around them.

I don’t want to provide anyone a useless piece of paper that does not provide quality health care. We may as well give everyone a “proud cut” horse that no one could ride.

Thank you, Congresswoman Renee Ellmers, for being willing to listen to me regarding the uninsured and actually follow-up with the intent to implement.

Quality health care is imperative. Necessary. Needed. We need to fix this system.

Obamacare, Health Care Exchanges, Subsidies, Typos, and Speak-o’s

Have you ever said something that you immediately wished you could put back in your mouth? I know I have! In fact, just recently, I was eating lunch with my husband and one of our closest friends Josh. Josh, his wife, Tracey, my husband Scott and I ride horses together almost every weekend. Our daughters come with us, and it’s a fun family event. So, I should have known that a manger is a tool used in barns to hold the hay for the horses to eat, not just baby Jesus’ bed.

Josh tells me that he is going to pick up a manger. To which I respond, “Josh, why do you need a baby manger?” If words came out of your mouth on a string, I would have grabbed that string and shoved it back into my mouth. Of course, my husband had no end to his ribbing. “Josh, why do they sell baby mangers in Tractor Supply?” And “Baby Jesus was so lucky that someone put a manger in that barn for when he was born.”

At that point, I would have liked to claim that I had a “speak-o.” You know, like a typo, but for speech.

At least this is what Jonathan Gruber has claimed…that he made a speak-o in 2012.

Jonathan Gruber is one of the architects of the Affordable Care Act (ACA). He drafted much of the language included in the ACA. After the ACA was passed, Gruber was interviewed by a number of journalists regarding specific sections of the ACA. One of the sections on which he spoke was the section that allowed for health care premium subsidies for people enrolled in the program who reside in states which created state-run health care exchanges as opposed to states that opted to use the federal exchange. For ease of this blog, I will call this ACA section the “Health Care Premium Subsidies Section.”

As I am sure you are aware if you follow my blog, two appellate court cases came out July 22, 2014, regarding the Health Care Premium Subsidies Section, with polar opposite holdings. In Halbig v. Burwell, the D.C. Circuit Court found that the clear language of the ACA only allows the health care premium subsidies in states that created their own state-run health care exchanges, i.e, residents in NC along with 35 other states would not be eligible for the subsidies. See my blog: “Halbig: Court Holds Clear Language of the ACA Prohibits Health Care Subsidies in Federally-Run Exchanges.”

Juxtapose the 4th Circuit Court’s decision in King v. Burwell, which held that “For reasons explained below, we find that the applicable statutory language is ambiguous and subject to multiple interpretations. Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.”

The two cases were released within hours of each other and came to two entirely different conclusions. Halbig: ACA is clear; King: ACA is ambiguous.

Interesting to note is that D.C. is not a state, and the 4th Circuit clearly embraces five states.

In my Halbig blog, I explain the legal analysis of statutory interpretation. I also explain that based on my reading of the Health Care Premium Subsidies Section, I tend to side with the D.C. courts and opine that the Section is not ambiguous.

If, however, a court finds that the statutory language is ambiguous, the court defers to the agency’s interpretation “so long as it is based on a permissible construction of the statute,” which is clear case law found in the 4th Circuit.

Therefore, once the 4th Circuit determined that the statute is ambiguous, the court made the correct determination to defer to the IRS’ ruling that all states could benefit from the subsidies.

Yet another approach to statutory interpretation is considering the legislative intent. The courts may attempt to evaluate legislative intent when the statute is ambiguous. In order to discern legislative intent, courts may weigh proposed bills, records of hearing on the bill, amendments to the bill, speeches and floor debate, legislative subcommittee minutes, and/or published statements from the legislative body as to the intent of the statute.

Recently, some journalists have uncovered 2012 interviews with Gruber during which he states that the Health Care Premium Subsidies Section was drafted intentionally to induce the states to create their own health care subsidies and not rely on the federal exchange. How’s that for intent?

The exact language of that part of the 2012 interview is as follows:

Interviewer: “You mentioned the health information [sic] Exchanges for the states, and it is my understanding that if states don’t provide them, then the federal government will provide them for the states.”

Gruber: “I think what’s important to remember politically about this is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get the tax credits… I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”

What do you think? You think Gruber is pretty explicit as to legislative intent? Well, at least in 2012….

In 2014, Gruber states, as to his 2012 comment, “I honestly don’t remember why I said that. I was speaking off-the-cuff. It was just a mistake. People make mistakes. Congress made a mistake drafting the law and I made a mistake talking about it.”

According to Gruber, Congress made a typo; Gruber made a speak-o.

“It’s unambiguous that it’s a typo,” Gruber tells reporter Chris Matthews from NBC and MSNBC.

Um…a typo when the statement is spoken? Hence, the new word “speak-o” blowing up Twitter.

If Gruber’s statement was truly a speak-o, it was a re-occurring speak-o. Gruber also made two speeches in which he listed three possible threats to the implementation of Obamacare. In both cases the third “threat” was that states would not set up exchanges and, instead, would rely on the federal government.

I anticipate that Gruber’s 2012 and contrary 2014 statements will be at issue as these cases, Halbig and King, move forward.

As for me, I would like to invoke my own speak-o’s. I can only imagine how I will be received when I appear before a court and say, “Your Honor, I apologize. That was a speak-o.”

The Great and Powerful Affordable Care Act: Are High, Inflated Premiums Hiding Behind the Curtain?

A lawsuit that could come out as early as tomorrow could be catastrophic for the Affordable Care Act (ACA) in as many as 36 states and impact approximately 5.4 million Americans.

In so many ways, in the last year or so, the all-changing, great and powerful ACA that promised affordable health care for all and “if you like your health care coverage, you can keep it,” has fallen monumentally short of its original, lofty promises.

In a way, we all wanted to believe in the promises of the ACA, like Dorothy in “The Wizard of Oz.” Who can forget the disappointed sigh Dorothy expels when Toto pulls back the curtain of the Great and Powerful Oz only to see a mundane, elderly man with absolutely no super powers or means to grant her wishes. Dorothy wanted Oz to be real. She wanted desperately for Oz to be as Great and Powerful as he proclaimed. However, in reality, he was not.

Like Dorothy wanted Oz to be real, we all wanted the ACA to create an affordable, nationwide health care system…this health care utopia.

So many lofty promises of the ACA have already been crushed, either by the Supreme Court’s decision that allows states to opt-out of Medicaid expansion, or by President Obama himself in executive actions, including an action delaying the employee mandate.

The courts may deflate the illusions of grandeur of the ACA even more with an upcoming and anxiously awaited decision. The case of Halbig v. Burwell, a D.C. Court of Appeals case, has concerned citizens everywhere, who wait on bated breath for a ruling. Halbig could have a huge (negative) impact on health care premiums. Halbig could be the Toto that pulled back the curtain on the ACA.

Let me explain:

There is a subsection of the ACA that allows high insurance premium tax credits, in an effort to make premiums more affordable for low-income families. The subsection applies to individuals who make less than $46,075. In implementing the ACA, it was contemplated that those individuals who make under $46,075 will have difficulty affording the insurance premiums; therefore, the ACA gives nice, large tax credits to offset the costs of premiums.

However, according to the plain language of the statute, these tax credits only apply to those individuals enrolled “through an exchange established by the state.” (emphasis added). Yet two-thirds (or 36) of the states did not establish state-run health care exchanges (including NC). Instead, these states relied on the federal exchange, in part, to avoid additional cost expenditures.

Here is a map of states according to whether it is expanding Medicaid:

current-status-of-the-medicaid-expansion-decisions-healthreform1

The Halbig case asks the question: Can people living in states run by a federal health exchange reap the benefit of tax credits intended for those people participating in an exchange run by the state?

If the Halbig Court takes that stance that the statute is not ambivalent and must be followed exactly as it is written, then millions of Americans will become ineligible for the tax credits for health care premiums, because they will not be enrolled in a state-run exchange. Premiums would sky-rocket and many Americans would be unable to afford health care…again. It is estimated that without the tax credits, the health care premiums will cost 4x as much.

Interestingly, the Internal Revenue Service (IRS) weighed in and issued a highly-contested rule authorizing the federal exchange to issue tax credits. Amidst all the tomfoolery about the IRS targeting 501(c) charities owned by the Tea Party, it is surprising, at least to me, that the IRS would issue such a contentious ruling in favor of the ACA and anti-conservatives.

Hence, the Halbig case, in which Plaintiffs argue that the IRS has exceeded its statutory authority in issuing tax credits to those residing in states with federal exchanges, when the ACA clearly states that the tax credits only apply to state-run exchanges.

If the D.C. Court of Appeals sides in favor of the Plaintiffs, the following could occur:

• Residents of 36 states could pay health care premiums 4x more than promised;
• The ACA would fall short of promises…again;
• The IRS will have exceeded its authority to benefit Democrats…again;
• People may not be able to afford the health care premiums;
• The ACA could risk the downfall of many more promises.

We all wanted the ACA to create health care utopia. We all wanted the Great and Powerful Oz to be Great and Powerful.

But the courts may tell us we just can’t say, “Pay no attention to the man behind the curtain!!”

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