On September 29, President Obama signed a continuing resolution appropriations bill that will fund the government through December 9, 2016, unless a 2017 appropriations bill is passed before that date. The headline is that the bill provides $1.1 billion in funding for combating the Zika virus. But the legislation otherwise continues in place funding for ACA programs at the rates at which they were funded for 2016, subject to a half percent reduction.
The continuing resolution retains riders and restrictions imposed by the 2016 appropriations legislation, including restrictions on using HHS administrative funds to fund the risk corridor program, elimination of funding for the Independent Payment Advisory Board, and various reporting requirements for ACA programs. The only new restriction on ACA funding in the bill is a rescission of $168 million in unspent ACA funds that were supposed to be available for funding health coverage in the territories.
The continuing resolution otherwise contains no new restrictions on ACA funding or implementation, however. There is no prohibition against the use of the judgment fund to settle risk corridor cases. And there is no requirement that HHS transfer funds from the reinsurance program to the Treasury, another demand of ACA critics (see below). The battle over health care reform will likely be rejoined in Congress after the elections, but the ACA has survived the latest round of congressional action largely unscathed.
GAO Sides With Republicans On Treasury Reimbursements From Reinsurance Program Collections; HHS Stands Its Ground
The temporary reinsurance program established by section 1341 of the Affordable Care Act was adopted to reinsure health insurers in the individual and small group market for high-cost claims during 2014, 2015, and 2016, the first three years of the health insurance market reforms and the marketplaces. The reinsurance program is funded by contributions collected from insurers and third party administrators of self-insured employer plans, which were supposed to amount to $10 billion for 2014, $6 billion for 2015, and $4 billion for 2016. The program has had a significant effect on individual market premiums, accounting for premium reductions of 10 to 14 percent in 2014, 6 to 11 percent in the 2015, and 4 to 6 percent for 2016, according to the American Academy of Actuaries.
The program was also, however, supposed to collect $2 billion each for 2014 and 2015 and $1 billion for 2016 to be deposited in the Treasury. These funds were intended to reimburse the Treasury for the $5 billion spent on the early retiree reinsurance program between 2010 and 2013. HHS set the contribution rate for the insurers and self-insured plans contributing to the program for the three years at a level that it believed would be sufficient to collect the amounts needed to fund the program and reimburse the Treasury, plus cover administrative costs. For 2014, however, HHS collected only $9.7 billion toward the $12.2 billion target, and in 2015 it received only $6.5 of the $8.025 billion needed. CMS had thus to decide how to allocate the funds collected toward the program’s costs.
CMS initially stated in its 2014 and 2015 Notice of Benefit and Payment Parameters that in the event of a shortfall it would allocate funds collected pro rata between the reinsurance program and reimbursing the Treasury. When it became clear, however, that there would be an actual shortfall, CMS reconsidered, concluding from its interpretation of the language of section 1341 that the primary purpose of the statute was to provide reinsurance; CMS thus decided that all funds collected up to the amounts specified for the reinsurance program should be allocated to that program rather than to repaying the Treasury. Thus, it forwarded nothing to the Treasury for 2014 and about 0.5 billion for 2015.
Congressional Republicans have taken issue with this conclusion, arguing that the statute mandates that HHS reimburse the Treasury. They asked the Government Accountability Office to weigh in on the question. On September 29, the GAO issued an opinion, siding with the Republicans.
The GAO concluded that the statute requires HHS to collect funds to reimburse the Treasury as well as to fund the reinsurance program, and that money collected for the Treasury cannot be used for the reinsurance program. It opined that HHS’ reading of the wording of the statute was “unconvincing” and, moreover, contrary to HHS’ initial opinion on how a shortfall should be addressed. The GAO concluded that in the face of the shortfall, CMS should have allocated the funds collected pro rata between the reinsurance program and reimbursing the Treasury, and that therefore HHS owes approximately $3 billion to the Treasury.
The decisions of the Comptroller General, the head of the GAO, are binding on executive agencies, but the Comptroller General has no enforcement authority. HHS has apparently already distributed the reinsurance amount collected for 2014 and much of the amount collected for 2015 to insurers. It is very unlikely that HHS could recover these funds without doing serious damage to insurers in the individual market or that it will do so. It is also hard to believe that HHS could attempt retroactively to demand additional contributions from insurers and third party administrators of self-insured plans for 2014 and 2015, or to pay $3 billion from some other HHS account. HHS has reportedly taken the position that its interpretation of 1341, established through notice and comment rulemaking, is legal and that it intends to stay the course.
HHS Reports Coverage Gains Under ACA
On September 29, 2016 the HHS Assistant Secretary for Evaluation and Planning (ASPE) released a report titled “Affordable Care Act Has Led to Historic, Widespread Increase in Health Insurance Coverage.” ASPE reports that the level of uninsured in the United States has reached a historic low of 8.6 percent, with 20 million gaining coverage under the ACA.
The report documents reductions in the uninsured rate since the ACA was adopted at every income level, in every ethnic group, in every age group, and in both urban and rural areas. Reductions in the uninsured from 2010 to 2015 for non-elderly adults range:
- by income group from 37 percent for those with incomes between 250 and 400 percent of the poverty level to 48 percent for those with incomes between 100 and 125 percent of poverty;
- by race and ethnicity from 35 percent for Hispanic non-elderly adults (from 43 to 28 percent) to 59 percent for non-Hispanic Asians (from 19 to 8 percent);
- by age group from 36 percent for those aged 26 to 34 to 52 percent for those aged 18 to 25; and,
- by metropolitan status from 39 percent for those who do not live in metropolitan areas to 42 percent for those who do.
The report once again emphasizes that reductions have been more dramatic in states that have expanded Medicaid than in those that have not. The overall uninsured rate decreased by almost 50 percent, from 19.9 to 10 percent, between 2010 and 2015 in Medicaid expansion states and by only 32 percent, from 25.9 to 17.7 percent, in states that did not expand.
The disparity in reductions in the uninsured rate was much starker with respect to non-elderly adults with incomes below 100 percent of the federal poverty level. The uninsured rate for this population dropped by 54 percent in expansion states but only by 19 percent in non-expansion states. The uninsured rate among non-elderly adult Hispanics dropped by 43 percent in expansion states but by only 26 percent in non-expansion states, while the rate among non-Hispanic Black non-elderly adults dropped by 59 percent in expansion states, by only 37 percent in non-expansion states.
There is much that is controversial about the ACA, but I know of no serious commentator on health policy who does not recognize that the uninsured rate has dropped dramatically since the ACA was adopted. It is thus remarkable that a Kaiser Health Tracking Poll released on September 29 found that only 26 percent of respondents realized that the number of uninsured was at an all-time low. Of those polled, 21 percent believed that the number of uninsured was at an all-time high, while 46 percent believed that the level was about the same as it has been. Of those who report that they have been following the news on the issue of the uninsured “very closely,” 26 percent believe that the uninsured rate is at an all-time high (compared to 32 percent of very close news followers who know that it is at an all-time low). One can only guess (or despair) at what news sources Americans are following.
A Third Round Of ACA Litigation
As the ACA becomes ever more firmly established as the framework of our health care system, the nature of ACA litigation is beginning to change. In the years immediately following the enactment of the law, a dozen or more lawsuits were filed challenging the constitutionality of the law itself. These challenges largely failed, although in 2012 the Supreme Court held in the National Federation of Independent Business v. Sebelius case that Congress could not constitutionally compel states to expand Medicaid to low-income adults, thereby leaving 3 million Americans without access to health care coverage.
A second round of cases challenged the implementation of the law. A number of these cases contended that the administration had misinterpreted the law in allowing premium tax credits to be available through the federal exchange. This challenge was rejected decisively by the Supreme Court in King v. Burwell. Most of the other implementation challenges have been dismissed as well. A district court did, however, decide in favor of the House of Representatives in House v. Burwell, which challenges the provision of cost sharing reduction payments by the administration without an annual appropriation; this case is currently pending before the District of Columbia Court of Appeals. In addition, challenges to the contraceptive mandate continue to be litigated.
We are now seeing a third round of litigation, in which insurers and other participants in ACA programs are asserting their rights under the ACA or contesting the way in which the ACA has been applied to their particular situation. This includes a number of cases filed by insurers challenging the government’s failure to pay out all of the money owed to them under the risk corridor program.
On September 26, 2016, the United States District Court for the District of Minnesota dismissed Batsche v. Burwell. This case involved the temporary reinsurance program. As described above, the reinsurance program collects a fee from insurers and the third party administrators of self-insured employer plans and distributes the money to insurers in the individual and small group market with very high claims.
In the initial regulations implementing this program, HHS concluded that self-insured, self-administered group health plans (mainly collectively bargained plans) were required to pay the reinsurance fee. In 2014, HHS reconsidered, and decided that they were not subject to the fee, but HHS applied this interpretation only for 2015 and 2016. The Trustees of the Twin City Pipe Trades Welfare Fund, a self-insured, self-administered fund, sued to enjoin HHS from collecting the 2014 fee as well. There was one problem, however: the fund had already paid the $762,663.90 fee for 2014. They sued to get the money back.
The federal court dismissed the case, holding that the plaintiff was essentially suing only for money damages for losses it had suffered because of the government’s action in collecting the 2014 fee, and thus the lawsuit was barred by the government’s defense of sovereign immunity. The sovereign immunity doctrine protects the government from lawsuits where it has not specifically agreed to liability. The court distinguished the case from lawsuits (including arguably the risk corridor cases) where a plaintiff is suing to obtain a benefit that it is “entitled” to under the ACA, where sovereign immunity may not apply. The court also held that if the plaintiffs could argue that the government had waived sovereign immunity, the case would have to be brought in the Court of Federal Claims (where the risk corridor cases are being brought).
Assuming the ACA continues to be the law of the land, it is likely that lawsuits by insurers, providers, and beneficiaries asserting rights under the statute will become quite common, as lawsuits asserting rights under the Medicare and Medicaid programs are now common. Medicaid and Medicare cases often present complex jurisdictional and procedural issues. A number of these issues have had to be decided ultimately by the Supreme Court. ACA litigation is likely also to present such issues, as the Batshe case demonstrates.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2dsraun
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