The biggest issue in healthcare for both the insured and the uninsured is COST. The PPACA does address concerns people have over coverage with the pre-existing condition now being covered, and expanding Medicaid to cover more people, as well as other provisions in the bill. However, the bill does not address cost and so many of the issues in healthcare will not be solved by this bill for that very reason. More updates to come as news unfolds.
Next Stop for Reform: Supreme Court
JAN 1, 2012
Health Data Management
President Obama in March 2010 signed into law the Patient Protection and Affordable Care Act, implementing enormous changes in the U.S. health care industry.
Almost immediately, opponents of the law filed lawsuits challenging its constitutionality. Those suits have wound through the courts and now the Supreme Court will have its say, with oral arguments in January and an opinion expected by this June. The core issue for the Court is whether the individual mandate requiring all persons have health insurance is constitutional-whether Congress exceeded its authority.
There are three basic scenarios for how the court could rule, and each will affect provisions of the law, including at least seven provisions with a strong focus on health information technology.
The scenarios for a ruling are:
* The individual mandate is constitutional so the law stands as is;
* The individual mandate is unconstitutional but everything else in the law is constitutional; or
* The individual mandate is unconstitutional and as a result, that renders the entire law unconstitutional.
In the first scenario, the obvious effect is that nothing changes with the health care reform law. Things will get tricky, however, under the other scenarios.
But first, a look at where the case stands.
The Court decided to review a Court of Appeals ruling that the individual mandate in the reform law is unconstitutional and cannot be severed, or separated, from the rest of the law and therefore the entire law is void.
Judge Roger Vinson, senior judge in the Northern District of Florida, Pensacola Division, ruled with considerable reluctance that the mandate was not severable from the rest of the law because while the mandate was “necessary and essential” to the law as written, it is not “necessary and essential” to health care reform in general.
“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void,” Vinson ruled. “This has been a difficult decision to reach, and I am aware that it will have indeterminable implications. At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled, ‘The Patient Protection and Affordable Care Act.’”
Vinson in his ruling seemed to try to set the terms of what the Supreme Court should consider. He made clear that his ruling was based on constitutionality issues and not the merits of the reform law itself. “I emphasized once before, but it bears repeating again: this case is not about whether the Act is wise or unwise legislation, or whether it will solve or exacerbate the myriad problems in our health care system. In fact, it is not really about our health care system at all. It is principally about our federalist system, and it raises very important issues regarding the Constitutional role of the federal government.”
In addition to the Florida case, the Supreme Court also will consider parts of other Appeals Court rulings. On the question of the individual mandate, the Supreme Court could punt and not rule on the issue, declaring the question of constitutionality to be premature.
Under the mandate, the government would issue tax penalties to people not insured by 2014. The Court will consider arguments that the federal Anti-Injunction Act prohibits legal challenges until taxpayers start to pay a penalty. An Appeals Court in Virginia ruled opponents to health reform did not have legal standing because penalties have yet to be paid. The Supreme Court further will consider the constitutionality of significant expansion of state Medicaid programs.
The effect on HIT
Paul Keckley, executive director of the Deloitte Center for Health Solutions, a unit of the Deloitte consultancy, believes the Supreme Court picked the Florida case as the core issue, because Florida is the most pervasive ruling and the court was looking for a wide interpretation of the law.
Florida and other courts considered whether the individual mandate exceeded Congress’ authority under the Commerce Clause of the Constitution, which regulates activities that substantially affect interstate commerce. But the Florida ruling was the only one to determine that the mandate violated the Commerce Clause and was unconstitutional, and that the mandate could not be severed from the rest of the law.
An aside: With a little luck, the Obama administration may have never faced the judicial quandary it’s now in. Language is commonly put in legislation stating congressional intent that if a provision is found unconstitutional, the rest of the law stands, says Dave Roberts, vice president of government relations at the Healthcare Information and Management Systems Society.
With sleep-deprived congressional staffers racing deadlines to get the bill printed and proofed, that language was inadvertently left out of the Affordable Care Act, according to Roberts. The administration says it was a clerical error and the intent was to include the language.
The reform law includes the individual mandate-which was a Republican idea that Newt Gingrich and Mitt Romney, among others, originally championed before President Obama adopted it-because that was the deal struck with insurers to get them on board. Both Romney and Gingrich now oppose the individual mandate.
Having everyone insured means having all of the younger and healthier population covered and paying premiums but not utilizing a lot of care, says John Moore, managing partner at Chilmark Research, a Cambridge, Mass.-based consultancy.
Also under the reform bill, parents can cover children up to age 26 and keep paying those family plan premiums. Having the young and healthy paying into the insurance system would offset insurers’ much higher costs for covering less healthy populations, such as those with chronic or pre-existing conditions, he notes.
Imposition of the individual mandate also paved the way for the law’s prohibition of pre-existing conditions in health insurance policies. “In order to prohibit pre-existing condition clauses, there must be a concurrent requirement that all individuals carry health insurance,” explains Michael Silhol, a health care attorney in the Dallas law firm Haynes and Boone LLP. “Otherwise, individuals would wait until they got sick before buying health insurance, which would bankrupt insurers. This would be the same situation as if car drivers waited until they had an accident to buy auto insurance and expected the insurance to pay for their accident.
The fiscal bottom line on the individual mandate is that it would reduce the mountains of bad debt in health care if everyone were insured. Half of the revenue to offset costs of the Affordable Care Act comes from the mandate, says Keckley of Deloitte.
But while the mandate is critically important to funding reform, it’s only one of several major funding components, he adds. There are hundreds of billions of dollars in excise taxes on health plans, reimbursement concessions by hospitals and price cuts by pharmaceutical firms.
So, Keckley asks, if the individual mandate is ruled unconstitutional but the rest of the law stands, are those taxes and concessions still binding? That could start a new avalanche of legislation and lawsuits, he adds.
The financial hit alone from loss of the individual mandate could have a major adverse effect on health information technology initiatives, Keckley contends. Bad debt will only get worse, complicating providers’ ability to fund costly initiatives. “The commitments to I.T. will have to be less. You won’t be able to invest in I.T. as you historically have.”
Here’s why: Under the reform bill, the industry is expecting the growth of bad debt to slow considerably between 2014 and 2016. If that doesn’t happen, it would have to reprioritize spending plans if instead there is a high spike in bad debt that wasn’t expected. So, discretionary investments, such as I.T., would be at risk.
Spending on ICD-10 is not discretionary and electronic health records meaningful use is partially discretionary, but just about every other I.T. initiative would fall squarely in the discretionary column. “What will this do to hospitals who are bringing their physicians under their umbrella, and bringing new I.T. pressures?” Keckley asks. “The trickle-down impact is enormous.”
Assessing the fallout
By the time the Supreme Court got the health reform case, five Appeals Courts had issued their own rulings. A court in Richmond, Va., ruled the lawsuits were premature, as assessment of tax penalties for failure to be insured don’t start until April 2014. Courts in Cincinnati and the District of Columbia upheld the mandate and the law. The Atlanta court struck down the mandate but upheld the rest of the law, and Judge Vinson in Florida struck down the mandate and entire law.
Given the opinions of the lower courts, it’s unlikely the Supreme Court will toss the entire law, attorney Silhol believes. Roberts of HIMSS doesn’t offer a prediction, but says that based on rulings from lower courts, the high court will have to be somewhat consistent with its ruling.
But the primary lower court ruling in play is Florida, and that’s the one that tossed the baby with the bath water. Consultant Moore doesn’t think the Supreme Court will throw out the whole law and send everyone back to the table. “If they change anything, my feeling is they will prune it, they will not chop down the tree. The big question is what limbs they will cut down.”
But just waiting to see what falls from the tree already is having an effect on the industry, Moore says. At the American Health Insurance Plans’ annual meeting in June, he saw widespread uncertainty among payers, regulators and other stakeholders on how much they should invest in new health care initiatives with a Supreme Court ruling and presidential election looming.
Regardless of how the court rules, or Republican promises to repeal the Affordable Care Act if they win the White House, there are plenty of provisions that, on their own, simply have wide support in the industry and Congress, Moore and other industry observers contend.
Pat Kennedy, president of PJ Consulting in Rockville, Md., lists these general policy provisions in the law as having staying power:
* Coverage of children up to age 26;
* Coverage for preventive care; and
* Use of data analytics to support effective and efficient treatment.
“This in turn will keep accountable care organizations, health insurance exchanges, medical homes and other initiatives to improve quality of care while controlling the cost moving forward,” he contends. “It is just good business, with or without health care reform.”
There’s also wide support for many reform provisions with information technology at their core, including:
* New “operating rules” to further standardize electronic HIPAA transactions;
* Two new HIPAA transactions-electronic funds transfer and claims attachments;
* Availability of Medicare claims data extracts for analysis; and
* Electronic enrollment in public health and human services programs.
Support is debatable at best for three other I.T. provisions: adoption of the long-delayed health plan identifier, state insurance exchanges to ease consumer comparison and purchase of coverage; and a new tax on medical devices including devices that collect and/or transmit data, such as patient monitors.
But heavily supported or not, these I.T. provisions would be just as dead as the individual mandate under a Supreme Court ruling that tosses the entire reform law. And the provisions would be just as dead if the Supreme Court doesn’t throw out the law, but Republicans sweep the 2012 elections and make good on their pledge to repeal ObamaCare.
So, what happens next? If the Patient Protection and Affordable Care Act is no longer the law of the land, provisions with industry support will have to be reintroduced, re-approved by Congress and re-signed by the president.
New legislation could be drafted to include, multiple well-supported provisions in a single bill, or the provisions would have to be added in piecemeal fashion as amendments to bills going through the Congress to get back child coverage up to age 26, new HIPAA transactions and operating rules, federally authorized accountable care organizations, and anything else in the reform law.
Like many provisions, the move toward ACOs-a linchpin in the effort to cut health care costs-would not go away if reform does.
“The concept of sharing risk is a direction we’re moving in anyway,” says Dave Roberts of HIMSS. But federally-sponsored ACOs would still need new congressional reauthorization, just like other provisions. And nothing has been easy to get through Congress in recent years.
Proponents of various provisions could try to move legislation quickly following an adverse court ruling or wait until a new Congress begins in January 2013, Roberts says. But he doesn’t take legislative action for granted as congressional gridlock could remain until after November, and the environment might not improve. Remember, he cautions, no Republican in Congress voted for the reform bill.
Prospects are dimmer for provisions where support could be dicey. Many states, for instance, aren’t aggressively moving to build the mandated exchanges, and two states-Oklahoma and Kansas-have declined federal funds.
Keckley at Deloitte believes if new legislation was enacted to authorize state insurance exchanges, it would have to be on a voluntary basis. Roberts doubts exchanges could get re-passed as state support is tepid.
Consultant Kennedy thinks most states, even if not mandated, will offer an insurance exchange, albeit on a smaller scale than envisioned under reform.
“The goal is to create an environment where more people, especially those with pre-existing conditions, can afford to purchase health coverage, and not force people to buy,” he says. “So, most states will still implement exchanges, and lobby Congress to provide some funding, even if the reform law is terminated.”
The health plan identifier, which payers successfully fought for more than a decade before reform was enacted, goes away if reform goes away, Keckley predicts. It would default to being a decision of the states, but would add another layer of costs. And the new tax on medical devices, which no one liked except actuaries who eyed $20 billion in more revenue to fund reform, would be gone.