Health Care Reform & ACA

Payers, Providers, and Patients – Oh My! Is Crowell & Moring’s health care podcast, discussing legal and regulatory issues that affect health care entities’ in-house counsel, executives, and investors. In this episode, hosts Payal Nanavati and Joe Records, sit down with former regulators Jon Foley, Rob Shriver, and Kristi Martin to discuss the

The U.S. Court of Appeals for the Fifth Circuit could strike down the Affordable Care Act (ACA) as unconstitutional any moment. Several states are preparing for the impact.

In April 2018, Texas, 19 other states, and two individual plaintiffs filed a complaint in the U.S. District Court for the Northern District of Texas, arguing that the ACA, as amended by more recent legislation, is unconstitutional. They won—the district court held in Texas v. U.S. that the individual mandate is unconstitutional, and that the rest of the law cannot be severed from that provision, so it also must fall. The Fifth Circuit heard oral arguments in July of 2019 and may hand down a decision at any time. Rather than waiting for the possible results of that decision, many states are acting now to soften the blow.

As discussed below, if the district court’s decision is upheld and ACA is struck down, the effects likely would be widespread and dramatic. Nearly 20 million people with insurance under the ACA would be at risk of losing such coverage, markets would be disrupted, and popular consumer protections would be ineffective, including those for persons with preexisting conditions and coverage of dependent children up to age 26. As we have discussed in this space before, the sudden absence of some less-talked-about provisions of the ACA could have serious impacts on the authority behind innovative payment models, several of which have states as direct participants. In addition, billions of dollars in federal Medicaid funding would be removed from states’ budgets.


Continue Reading States Take Action in Anticipation of Possible ACA Unconstitutional Ruling

As of October 3, 2019, the Office of Management and Budget completed its review of the proposed rules for “modernizing and clarifying” the Physician Self-Referral Regulations and revising the safe harbors under the Anti-Kickback Statute and rules regarding the Beneficiary Inducement Civil Monetary Penalties Law.

These regulations were the subject of two Requests for Information

Last week, Tennessee proposed to the Centers of Medicare and Medicaid Services (“CMS”) the first of its kind Medicaid block grant program, which would constitute a fundamental restructuring of the Tennessee Medicaid program. The proposal is intended to implement Tennessee House Bill 1280, enacted in May of 2019, which directed the governor to request CMS to approve the block grant through a Section 1115 waiver amendment.

Tennessee currently operates its Medicaid program (“TennCare”) through a Section 1115 waiver approved by CMS. Under the proposed amendment, the state would receive a block grant in an amount calculated using the federal government’s projections for the state’s Medicaid program costs, calculated as if the state were not currently participating under a 1115 demonstration waiver. In years in which the state spends less than the block grant, the state and the federal government would evenly share in the resulting savings.

As part of the proposal, Tennessee has asked for significant exemptions from federal Medicaid managed care laws. Among other things, the state has asked for flexibility to spend block grant funds on items and services not otherwise covered under Medicaid; to adopt a commercial-style closed formulary; to make changes to its benefit packages without CMS approval; to vary benefit packages for members based on medical factors or other considerations; and to be relieved from compliance with Part 438 of Title 42 of the Code of Federal Regulations, including provisions requiring federal approval for pursuit of healthcare delivery system reform initiatives, managed care contracts, and actuarially certified capitation rates paid to managed care contractors. The state believes that the proposal would “appropriately recognize[] the state’s efforts to contain costs and improve program quality, while providing a meaningful incentive to continue building on those efforts to make TennCare a stronger and more effective program.”
Continue Reading Tennessee Proposes First of Its Kind Block Grant Program for Medicaid

On August 26, North Carolina passed a law allowing small businesses to band together to offer group health insurance through association health plans (“AHPs”). The Small Business Health Care Act, passed without the governor’s signature, authorizes the formation of large group health plans for association members, including small businesses and sole proprietors. However, these plans can be implemented only if they do not violate federal law, and the federal regulations authorizing this form of AHPs were struck down at the U.S. District Court for the District of Columbia earlier this year. While this decision is currently on appeal at the D.C. Circuit, North Carolina has included in its legislation a back-up plan that the state can pursue expansion of AHPs in case the federal regulations remain struck down.

The U.S. Department of Labor issued regulations last June expanding the situations under which AHPs could be formed. These regulations were created in response to a push by the Trump administration to provide greater choice in health care coverage. Proponents of the regulations believed that the expansion of AHPs could make coverage more affordable and accessible for small business employees and sole proprietors. The regulations, however, were met with significant criticism on the grounds that AHPs would undermine the Patient Protection and Affordable Care Act (“ACA”), create instability in the ACA marketplaces, and lead to gaps in patient protection and coverage. This March, as noted in a prior C&M alert, the U.S. District Court for the District of Columbia struck down these regulations.


Continue Reading North Carolina Enacts Association Health Plan Law

In the latest episode of Payers, Providers, and Patients – Oh My!, Troy Barsky and Alice Hall-Partyka talk with Joe Records and Payal Nanavati about how recent litigation challenging the constitutionality of the Affordable Care Act may impact providers and payers. The discussion focuses on the authority for innovative health care models and

A patient has an emergency and goes to a hospital she knows is in her plan’s network. She receives treatment. She leaves the hospital. Weeks later, she receives a medical bill for tens of thousands of dollars. Unbeknownst to her, some or all of her treating doctors were out-of-network.

This all-too-common story has contributed to a significant medical debt crisis in this country, and has captured the attention of policymakers on all sides of the political spectrum—leading to the rare circumstance of executive and legislative alignment and the potential for bipartisan legislative action.

Proponents of price transparency hope that it will improve competition and allow patients to better understand their financial responsibility ahead of receiving services. The idea is that disclosing prices to individuals will incentivize them to “shop around” for health care services, which may drive down costs. On the other hand, opponents of price transparency argue that releasing such information could compromise bargaining leverage between third party payers and providers, and have the effect of driving up prices since information exchanges in concentrated markets can lead to tacit coordination that’s difficult to detect and punish under the antitrust laws.


Continue Reading Trump Administration and Congress Are Moving Quickly on Health Care Price Transparency and Lowering Costs

In a victory for the Trump Administration, on July 18, 2019, the United States District Court for the District of Columbia upheld a 2018 regulation designed to expand the sale of short-term, limited duration insurance policies and rejected claims that the regulation unlawfully undermined the Affordable Care Act (“ACA”) and would destabilize the ACA marketplaces. Plaintiffs have indicated that they will appeal the decision.

Short-term, limited duration insurance policies are not required to comply with ACA protections, including those relating to essential health benefits like maternity care and prescription drugs. Originally designed to fill very short gaps in coverage, these types of plans were not included in the definition of individual health insurance under the ACA. These short term policies can be designed with high out-of-pocket maximums, low coverage caps, and significant benefit gaps. They can also deny coverage to those with pre-existing conditions. For these reasons, these policies can be marketed at a lower cost. Plaintiffs representing insurers, providers, and consumer groups sued the administration arguing that the availability of short term plans would draw away younger and healthier individuals from risk pools and put insurers at an unfair disadvantage by forcing them to compete with short term plans that would not be required to comply with the same ACA protections.


Continue Reading Court Upholds Short-Term, Limited Duration Insurance Policy Rule

On January 1, 2019, portions of the U.S. Department of Labor’s (DOL) Final Rule expanding the availability of Association Health Plans (AHPs) went into effect. AHPs allow small businesses to band together and negotiate better deals when buying insurance for their members.

The partial government shutdown hasn’t slowed the raging debate over how states are to implement the DOL’s final rule. On December 28, 2018, a federal judge ordered litigation concerning the rule to continue despite the shutdown.

States have reacted to the final rule in dramatically divergent ways. Some states believe that AHPs will make it finally possible for small employers to offer affordable healthcare options for their employees. Other states worry that AHPs will destabilize the individual insurance marketplace. They predict that healthy people will join AHPs because they are less expensive than other insurance options, and this shift will leave sicker people in a smaller pool with higher premiums.  
Continue Reading Taking the Pulse of New Association Health Plans

The Centers for Medicare & Medicaid Services (CMS) recently proposed a rule to allow Medicare Advantage plans to expand telehealth benefit coverage. (See alert for more detail) This proposed rule implements the statutory provisions in section 50323 the Bipartisan Budget Act of 2018. What you might not know, however, is that the Bipartisan Budget Act of 2018 is only one of many legislative vehicles by which advocates for telehealth expansion have been able to move the needle definitively in their favor during this session of Congress.

Over the past two years, Congress has shown its support for the utilization of telehealth by introducing forty-one bills that, if passed, would require Medicare to reimburse providers for their use of telehealth to treat numerous health conditions such as stroke diagnosis, mental health, chronic care management and opioid addiction treatment. Of note, the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 was the predecessor bill that passed out of the Senate in September of 2017 and became law on February 9, 2018 as a part of the Bipartisan Budget Act of 2018.
Continue Reading Government Affairs – The Progress of Telehealth Bills in Congress