Region’s hospitals, insurers keep close eye on impact of federal decision

9:21 PM, Mar. 26, 2012  |  

Written by

Laura Ungar for the Louisville Courier-Journal

It’s been cited as a driving force behind the proposed but thwarted merger involving University Hospital and a Catholic health care system.

It’s inspired new partnerships called “accountable care organizations,” including one being piloted by Norton Healthcare and Humana.

And it’s been hailed as providing extended coverage for more than 35,000 young adults in Kentucky.

The federal health reform law has already started making an impact locally — so area health advocates and officials are tuned in to this week’s Supreme Court proceedings.

“I think the entire health care sector and insurance sector are watching this closely because it has significant implications on both industries,” said Stephen Williams, chief executive officer of Norton. “This is very far-reaching.”

Jodi Mitchell, executive director of Kentucky Voices for Health, a coalition of health advocacy groups, said her organization takes no position on the arguments before the Supreme Court, instead concentrating on educating the public about health reform. But she added: “We expect the law will be upheld.”

One of the most well-known provisions of the Affordable Care Act, as the reform law is called, requires insurers that offer coverage to children on their parents’ plans to make that coverage available until the child is 26.

That portion of the law took effect in September 2010. According to the U.S. Department of Health & Human Services, 35,610 young Kentuckians already have gained coverage through that provision. In Indiana, 38,480 young adults gained coverage.

“This is helpful for college students going to school who can’t afford coverage,” Mitchell said. “And because they’re generally healthy, they’re advantageous on plans where you’re trying to spread out the risk.”

This week’s arguments before the Supreme Court won’t involve that provision, nor several others of the broad-ranging law, but instead will focus on a key and controversial provision — requiring nearly all Americans to have health insurance by 2014.

According to the U.S. Census Bureau, an average of 15.5 percent of Kentuckians — or 663,000 people — lacked health insurance from 2008-2010, as did 12.8 percent of Hoosiers, or 813,000 people. Nationally, 15.8 percent of Americans lacked health insurance during that period.

Health care experts say the reform law eventually would bring the rate of uninsured Americans down by about 60 percent.

Louisville-based Humana Inc., one of the nation’s largest health insurers, said it has long supported universal health coverage for all Americans.

And the company said that other parts of the reform law, such as requiring insurers to cover all applicants regardless of their health condition, cannot work without the “individual mandate” provision. Otherwise, healthy people could pass up insurance while sicker people would get it, raising premiums for all.

Officials at local hospital systems, which provide charity care for many uninsured patients and have unpaid bills from others, have said projections of how many people would gain coverage under the reform law are encouraging.

But they add a caveat — saying it’s unclear if projected gains in patients who would get insurance under health reform would be offset by funding reductions in a state and federal program for hospitals that treat large numbers of low-income people.

Officials at University Hospital, which cares for large numbers of uninsured patients, talked about this uncertainty during the debate involving the proposed merger with Jewish Hospital & St. Mary’s HealthCare and Lexington-based St. Joseph Health System, which is part of Catholic Health Initiatives of Denver. Gov. Steve Beshear ultimately rejected the proposed three-way merger, and Jewish and St. Joseph merged without University to create KentuckyOne Health.

Officials at those health care organizations — as well as others such as Norton and Baptist Hospital East — have said the reform law encourages them to partner with others to become more efficient, improve care and reduce costs.

Norton and UK leaders said the law is one of the main reasons behind their partnership, announced in June. That partnership includes a statewide stroke collaboration and a cancer program that would share resources.

Norton and Humana are also piloting an “accountable care organization” for commercially insured patients, a program that establishes financial incentives for health care providers to improve quality, eliminate waste and control costs. Louisville is one of four national sites in the ACO Pilot Project of The Engelberg Center for Health Care Reform at the Brookings Institution and The Dartmouth Institute for Health Policy and Clinical Practice. Officials said the program brings a emphasis on wellness and preventive care for patients.

Last October, the U.S. Centers for Medicare & Medicaid Services finalized new rules under the health reform law to help doctors and hospitals better coordinate care for Medicare patients through ACOs. The Medicare program is designed to reward ACOs that lower the growth of health care costs while still providing quality care.

Williams said Norton will still go forward with the ACO and partnerships no matter what happens with the health reform law.

“Even if major parts of it get repealed, I believe what we are doing and what other providers are doing we will continue to do,” he said. With health care expenditures making up 18 percent of the Gross Domestic Product in the United States, “we have to bend the cost curve or we are going to cripple the economy.”

SOURCE:

http://www.courier-journal.com/article/20120326/NEWS01/303260073/Region-s-hospitals-insurers-keep-close-eye-impact-federal-decision-

The Health Law And The Supreme Court: A Primer For The Upcoming Oral Arguments

Later this month, the high court will consider the fate of the health law. Here are key points to keep in mind while watching the action.

Topics: Supreme Court, Politics, Health Reform

By Stuart Taylor, Jr.

Mar 15, 2012

How big is the constitutional challenge to the Obama health care law, which the Supreme Court will hear on March 26-28?

For starters, it’s big enough for the justices to schedule six hours of arguments — more time than given to any case since 1966. After all, the Affordable Care Act is arguably the most consequential domestic legislation since the creation of Medicare in 1965.

It’s also big enough to attract more briefs than any other case in history. At least 170, including more than 120 “friend-of-the-court” or amicus briefs, have been filed, many of which are joined by 10, 20 or more groups of every imaginable description.

And, finally, it’s big enough to cause the justices to postpone until October half of the 12 cases that they would ordinarily hear in April in order to clear time to get started on the health care opinions that they are expected to issue by the late June, or possibly, early July.

 

What’s it all about?
The immediate issues, in the order the court will hear them, begin with the question of whether the so-called “individual mandate” — which requires that almost all Americans without coverage buy individual health insurance policies or pay fines — is ripe for adjudication now. Or must the case be deferred until 2015 because of the 1867 Anti-Injunction Act, which bars federal courts from ruling on the constitutionality of tax laws before payments are due?

After that come the arguments about what many consider the central issue: whether the mandate, which is unprecedented, should be voided because it represents an unconstitutional exercise of Congress’ powers to regulate commerce and to levy taxes.

Next is what becomes of the law’s hundreds of other provisions, covering 2,700 pages, if the mandate is unconstitutional? Are some or all of them “severable,” meaning that Congress would have wanted them to stand even if the mandate falls? For example, what about the provisions establishing tax credits to help small businesses and individuals buy health insurance and taxing large employers that do not provide full-time employees government-approved coverage?

Apart from those issues, does the law’s expansion of Medicaid violate the sovereignty of the states by effectively requiring them to spend more of their own money or forfeit all of the federal Medicaid money they now receive?

What’s the likely outcome?
Nobody knows. It’s clear that the court’s four more liberal members, like almost all other liberal legal experts, will find the law constitutional in all respects. It’s also clear that conservative Justice Clarence Thomas will vote to strike down much or all of the law. It’s less clear what swing-voting Justice Anthony Kennedy and conservative Chief Justice John Roberts as well as Justices Antonin Scalia and Samuel Alito will do.

Kennedy, Roberts, Alito, and (especially) Scalia — whom the government’s brief quotes five times — have all joined past decisions construing federal regulatory power very broadly. Two respected conservative federal appeals court judges, Laurence Silberman and Geoffrey Sutton, who is one of Scalia’s favorite law clerks, have upheld the law.

What are the major arguments for and against the individual mandate?
Defenders say that the broad constitutional power of Congress to regulate interstate commerce, and the even broader power to “lay and collect taxes,” both provide ample authority for requiring that people buy insurance as part of a comprehensive scheme to end “discriminatory insurance practices that have excluded millions of people from coverage based on medical history,” in the words of a brief by Solicitor General Donald Verrilli.

The same brief also asserts that uninsured people consume $43 billion a year worth of emergency-room and other health care for which they do not pay, costs that are shifted to insurers and that raise insured families’ average premiums by more than $1,000 a year. Critics of the law dispute these numbers.

The 26 states challenging the law (along with a business group and four individuals) say, in the words of a brief by Paul Clement, who was solicitor general under President George W. Bush: “The individual mandate rests on a claim of federal power that is both unprecedented and unbounded: the power to compel individuals to engage in commerce in order more effectively to regulate commerce. This asserted power does not exist. … It is a revolution in the relationship between the central government and the governed.”

Clement also stresses that President Barack Obama and his allies in Congress insisted during the debate before the measure became law that the financial penalty for failing to comply with the individual mandate is not a tax. They should not be allowed, he argues, to “enact legislation that would not have passed had it been labeled a tax and then turn around and defend it as a valid exercise of the tax power.”

The Anti-Injunction Act?
This reconstruction-era statute bars courts from considering the constitutionality of tax laws until payments are due. It will apply here if the court deems the individual mandate’s penalty provision a “tax.”

Because the mandate is not scheduled to take effect until 2014 and the first penalties would not be due until 2015, the federal courts would not yet have jurisdiction to consider the constitutionality of the penalties or the mandate. In other words, consideration of the case would be postponed until 2015, and, therefore, such a decision would convert the biggest case in decades into the biggest anticlimax in Supreme Court history.

Both sides say that the Anti-Injunction Act does not apply. But the court appointed a lawyer as “friend of the court” to argue that it does, as one federal appeals court held. This appointment signaled the court’s care to observe arguable limits on its jurisdiction even when the parties agree that it has jurisdiction.

What are the major arguments on severability?
The government says that if the court strikes down the mandate, it should defer until future cases any ruling on the severability of most other provisions. But, if it does rule on severability, the government maintains that only two other provisions should go down with the mandate. Those are the “guaranteed-issue” and “community-rating” provisions, which bar insurers from denying coverage or charging higher premiums because of medical history. Without the individual mandate, the government says, those provisions would send premiums soaring by creating incentives for healthy people to defer buying insurance until they need health care.

The 26 states argue that the mandate was deemed by Congress to be “necessary to make the other provisions work as intended,” and that the court should strike down the whole law.

The court appointed another friend-of-the-court lawyer to write a brief arguing that a decision striking down the mandate should leave the rest of the law — including guaranteed issue and community rating — intact.

What are the major arguments on Medicaid?
The government asserts that “it is well settled that Congress’s spending power includes the power to fix the terms on which it will disburse funds to the states,” that Congress has repeatedly expanded the state-federal Medicaid program, and that this new expansion will not “impose significantly onerous burdens on the states.”

The 26 states counter that the Medicaid expansion unconstitutionally coerces them because it “threatens States with the loss of every penny of federal funding under the single largest grant-in-aid program in existence — literally billions of dollars each year — if they do not capitulate to Congress’ steep new demands.”

Stuart Taylor, Jr. is an author and contributor to the National Journal and other publications.

SOURCE:

http://www.kaiserhealthnews.org/Stories/2012/March/15/supreme-court-curtain-raiser.aspx

State’s decision to halt health exchanges worries insurers

By Guy Boulton of the Journal Sentinel
Jan. 1, 2012 |<http://www.jsonline.com/business/states-inaction-on-health-exchanges-concerns-reform-advocates-ud3km6u-136515053.html?page=1>

A recent decision by Gov. Scott Walker could give the federal government greater influence over the state’s health insurance market – and that worries some in the industry.

Walker announced late last month that the state would halt work on the online marketplaces, or exchanges, required under federal health care reform until the U.S. Supreme Court rules on the constitutionality of the law.

The exchanges could help consumers and small businesses compare competing health plans.

They also could increase price competition by requiring health insurers to offer more standardized plans and by providing consumers with better information about what they are buying.

But how well they work will depend on dozens of decisions, such as how much flexibility to give health insurers in determining what to cover, and the roles of insurance agents and brokers.

Under the health care reform law, the state must have a plan in place to set up an effective exchange by January 2013. If it doesn’t, the federal government will set up the exchange.

There’s a risk in halting the work on the exchanges until the Supreme Court rules: If the law is upheld, the state would have only about six months to put together a plan.

Whether that can be done in that time frame is a question. It also is a concern for health insurance companies.”We do not want decisions about Wisconsin’s insurance market to be made in Washington,” said Phil Dougherty, senior executive officer of the Wisconsin Association of Health Plans.

One worry is that health insurers would face stricter regulations from the federal government than from the state Office of Free Market Health Care.”No question,” said Jon Rauser, president of the Rauser Agency, an insurance broker in Milwaukee.

The Office of Free Market Health Care has said it backs a “free-market, consumer-driven approach” for the state’s exchange. Consumer advocates have already criticized the working groups set up to advise the state, saying they are dominated by representatives of insurance companies and brokers.

Walker betting against it
Walker, who opposes federal health care reform, said that moving forward with the exchanges could be a waste of time and effort if the law is declared unconstitutional.

He denied that he was bowing to pressure from conservatives who have encouraged states not to plan for the exchanges.

His decision could be seen as a bet that the revamping of the health insurance market under federal health care reform won’t happen.

Under this scenario, the Supreme Court would declare the entire law unconstitutional – not just the provision that requires nearly everyone to have health insurance – or a Republican candidate would win the presidency in 2012 and be able to stop the law from being implemented.

Walker contends the state still can put together an exchange by the end of next year if the law is upheld.

But that would require the state to make a slew of quick decisions, ranging from arcane details on how to determine the actuarial value of the health plans to what information to provide consumers.”There are a lot of things that have to be worked out and thought through to make it work effectively,” said Barbara Zabawa, a Madison lawyer who is on the main working group to advise the state.

The state could meet the deadline, she said, but it would be a challenge.

Spokesmen for the state Office of Free Market Health Care have not responded to interview requests.

Legislation needed
Another potential obstacle is that the state may need to pass legislation to set up an exchange. That would require a special session of the Legislature if the law is upheld.

A lengthy debate on that legislation could further delay work on the exchange. Whether the Walker administration could get lawmakers to pass legislation is also a question.

Sen. Frank Lasee (R-De Pere), chairman of the Senate Committee on Insurance and Housing, has pledged to block legislation needed to set up an exchange.”We can come up with a lot of questions,” said Dougherty of the Wisconsin Association of Health Plans. “But we don’t have a lot of answers just now.”The state also may have to give back at least part of a $37 million federal grant to offset the initial cost of the exchanges.”I don’t know why the feds don’t pull that money, because they are not accomplishing anything with it,” said Bobby Peterson, a lawyer with ABC for Health, a public-interest law firm in Madison. “It’s a shame, because Wisconsin was in a position to be a leader.”At the same time, consumers might fare better if the federal government sets up the exchange rather than the Walker administration, Peterson said.

If nothing else, the governor’s decision adds to the uncertainty surrounding federal health care reform for health insurers.”The uncertainty is the worst part, because it’s hard to plan, it’s hard to budget, without knowing what’s on the horizon,” said Zabawa, the Madison lawyer on the working group.

She was disappointed by the state’s decision to stop work on the exchanges.”Wisconsin would be best served to have its own exchange tailored to the needs of the people of the state,” Zabawa said.

Rauser of the Rauser Agency said even people who oppose the federal law agree with that.”It’s a pragmatic alternative to doing nothing,” he said.

© 2012 <http://www.jsonline.com/copyright.html> , Journal Sentinel Inc. All rights reserved.


SOURCE:
To view this article by Guy Boulton for The Journal Sentinel in its original context, please visit  http://www.jsonline.com/business/states-inaction-on-health-exchanges-concerns-reform-advocates-ud3km6u-136515053.html

Why Medicaid Is No Longer a Voluntary Program

Why Medicaid Is No Longer a Voluntary Program

BY Jeffrey A. Singer

It is widely believed that Medicaid is a voluntary program. While this may have once been true, it is no longer the case. Today, states confront the dilemma of having to choose between joining Medicaid or being forced to sacrifice any health care “safety net” for their indigent populations. This is all because of a law enacted by Congress in 1986 called the Emergency Treatment and Labor Act (EMTALA).

In 1986, Congress passed EMTALA, making it a federal crime to transfer a patient from one hospital/emergency room to another for financial reasons. It compels hospitals to render care, even without any compensation.

EMTALA led to an explosion in uncompensated care. It became common knowledge that, if a person presents to a hospital emergency department, the hospital must provide care and may not transfer the patient elsewhere without the patient’s permission. This became a major cause of “cost-shifting,” as hospitals and doctors tried to recoup their losses from uncompensated care by raising their fees on insured patients.

Many doctors resigned from emergency room coverage, tired of rendering uncompensated care to people who might turn around and sue them for malpractice. EMTALA forced many hospitals to close their emergency rooms.

But EMTALA did more. It killed the voluntary nature of the Medicaid system.

Four years before the passage of EMTALA, Arizona still had its own state-run indigent care program.

Arizona law required each county to establish a comprehensive indigent care system. Maricopa County, home to metropolitan Phoenix, maintained a system of health clinics staffed with full-time physicians. At its heart was the Maricopa County Medical Center, a full-service teaching medical center, including a trauma center and the largest burn unit in the southwest. Patients who were seen in private hospitals and needed hospitalization were transferred over to “County.”

The system provided preventative care, prenatal care, mental health, and long-term care. Eligibility was tied to income and assets. Patients presenting for the first time as an emergency would be treated and retroactively enrolled in the system.

I was a surgical resident at “County” (1976-81). It was commonplace for a doctor at some other hospital to phone me and say, “I have an indigent patient in my emergency room who has an ‘acute gallbladder’ and who doesn’t have insurance. Can I send her over to you?” Like all of my fellow residents, I would enthusiastically accept the patient (we were a teaching hospital and wanted the experience). They would get prompt treatment, supervised by full-time faculty, cared for in a ward setting.

This system worked well and was popular. But in 1982, after pressure from various factions, Arizona became the last state to join Medicaid.

Today, if Arizona decided to leave Medicaid and resume its pre-Medicaid system, it couldn’t do so. EMTALA would prevent it from functioning. EMTALA specifically bans any hospital from transferring patients for financial reasons. Arizona’s pre-Medicaid system depended upon the transfer of indigent patients from private centers into its indigent health system, thus relieving private hospitals and providers from the burden of constantly providing uncompensated care.

Last year, when 26 states and the National Federation of Independent Business challenged, in federal court, the Patient Protection and Affordable Care Act (“Obamacare”), they argued there was no constitutional authority for the so-called “individual mandate.” But they also challenged the authority of the PPACA to require states to expand their Medicaid rolls, and thus their Medicaid budgets.

The plaintiffs claimed that compelling the states to increase the amount they spend on Medicaid was a federal “commandeering” of the states’ treasuries.

Medicaid is a voluntary program, said the Feds. If the states opt in they receive matching funds of 50% or more from the federal government to fuel the system. But nothing prevents the states from opting out of Medicaid, so state sovereignty is not being usurped.

The states responded that the loss of federal matching funds resulting from an opt-out would be so severe as to amount to coercing the states to stay in the program.

The District Court, and later the Appeals Court, didn’t buy this part of the states’ case. While they agreed that the “individual mandate” is unconstitutional, they didn’t see the state Medicaid mandates as usurping state sovereignty.

The U.S. Supreme Court recently agreed to hear the case in the spring of 2012. And it will revisit the Medicaid issue. Hopefully, at that time, the EMTALA factor will finally get the attention it deserves.

If a state opts out of Medicaid, it forfeits federal matching funds amounting to anywhere from 40% to 60% of the state’s Medicaid budget. It is fiscally impossible for the state to create anything remotely resembling Medicaid using solely state funds without imposing massive tax increases on its residents, as well as draconian cuts in other services.

But if a state chose to leave Medicaid and adopt a less extravagant, more cost-effective, county-based indigent care system, like Arizona enjoyed until 1982, it couldn’t do that either. How, for instance, can an indigent patient be transferred to the County Medical Center or any of the satellite County treatment centers for financial reasons? It would be a violation of EMTALA.

By banning the transfer of indigent patients to indigent care facilities, this 1986 federal law unintentionally denies states the freedom to exercise their traditional sovereign powers to design their own cost-effective forms of indigent care.

EMTALA leaves states no real choice. Any choice to opt out of Medicaid effectively forces them to abandon indigent health care delivery.

EMTALA is the heretofore-unnoticed 800-pound gorilla in the room that just might secure the argument that “Obamacare” violates state sovereignty.

Jeffrey A. Singer, MD practices general surgery in metropolitan Phoenix, writes and lectures on regional and national public policy, and writes for Arizona Medicine (the journal of the Arizona Medical Association).


SOURCE:
To view this article by Jeffrey A. Singer for The Hawaii Reporter in its original context, please visit http://www.hawaiireporter.com/why-medicaid-is-no-longer-a-voluntary-program/123