Federal appeals court revives Biden’s vaccine mandate for health workers in 26 states

https://www.fiercehealthcare.com/hospitals/federal-appeals-court-revives-biden-s-vax-mandate-for-health-workers-26-states?utm_source=email&utm_medium=email&utm_campaign=HC-NL-FierceHealthcare&oly_enc_id=8564C4000334E5C

A federal appeals court has reinstated in 26 states a Biden administration vaccination mandate for health workers at hospitals that receive federal funding.

A three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans ruled (PDF) that a lower court had the authority to block the mandate in only the 14 states that had sued and was wrong to impose a nationwide injunction.

It marks a modest win for the Biden administration’s pandemic strategy following a series of legal setbacks to the health worker vaccine mandate. Numerous lawsuits have been filed seeking to block vaccine mandates issued by governments and businesses as public health measures amid a pandemic that has killed more than 800,000 Americans.

The Centers for Medicare & Medicaid Services (CMS) announced in early November that it would be requiring applicable healthcare facilities to have a policy in place ensuring that eligible staff receive their first dose of a COVID-19 vaccine series by Dec. 5 and to have completed their series by Jan. 4, 2022. Failure to comply with the requirement, which covers 17 million healthcare workers, would place an organization’s Medicare funding in jeopardy.

But the mandate was blocked before the deadline and remains temporarily blocked in 24 states: the 14 states involved in the case reviewed by the New Orleans appeals court and 10 states where the mandate was blocked by a Nov. 29 ruling from a federal judge in St. Louis.

The 14 states that sued are Alabama, Arizona, Georgia, Idaho, Indiana, Kentucky, Louisiana, Mississippi, Montana, Ohio, Oklahoma, South Carolina, Utah and West Virginia.

In the lawsuits, states argued that CMS exceeded its authority with the rule and did not have good cause to forego the required notice and comment period. States that sued the Biden administration over the vaccine mandate also cited the ongoing workforce shortages affecting healthcare providers in their states.

In explaining its ruling, the 5th Circuit noted that the Louisiana-based federal judge had given “little justification for issuing an injunction outside the 14 states that brought this suit.”

As it stands, the vaccine requirement for Medicare and Medicaid providers is blocked by courts in about half of U.S. states but not in the other half, creating the potential for patchwork enforcement across the country.

Healthcare associations, individual experts and the Biden administration have all stood firm on the importance of vaccination mandates, with the novel omicron variant only adding to the president’s urgency to get shots in arms.  

However, the administration’s broader requirements have so far faced stiff competition from courts as well as right-leaning lawmakers and governors alike.

A Texas judge Wednesday separately granted a preliminary injunction to the state of Texas against the vaccine mandate, The Hill reported.

The Supreme Court this week also blocked a challenge to New York’s requirement that healthcare workers be vaccinated against COVID-19 even when they cite religious objections.

How Pending Decision on Obamacare Could Upend 2020 Campaign

Supporters of expanding Medicare at a town hall meeting this summer in Forked River, N.J.  Health care registers as a top priority for voters in poll after poll.

A federal appeals court’s ruling on the Affordable Care Act could be a huge headache for the president and take Democrats’ focus off Medicare for all.

 A federal appeals court in New Orleans is preparing a ruling on the Affordable Care Act that could put the law’s future front and center in the presidential race, overwhelming the current Democratic debate over Medicare for all and reigniting the health care-driven worries that helped Democrats win back the House last year.

Three judges on the Fifth Circuit Court of Appeals are weighing whether to uphold a Texas judge’s ruling that the law’s requirement for most Americans to have health insurance is unconstitutional, and that the rest of the sprawling law cannot function without it. It is hard to imagine a thornier domestic issue for President Trump, whose administration not only refused to defend the law in the case filed by Texas and 19 other states but sided with the plaintiffs, asking the court to invalidate it.

A ruling against Barack Obama’s signature domestic achievement as president, which provides health coverage for about 24 million Americans, would almost certainly be stayed pending further appeal.

But if it comes in the next few weeks, it could create significant confusion during open enrollment for the Obamacare plans offered through the law’s online marketplaces. And it would open a huge vulnerability for Mr. Trump, whose health care platform largely consists of attacking as socialism Democratic plans to expand government health care, either through Medicare for all or a government-run health care option that would be offered through the Affordable Care Act’s marketplaces.

A ruling against the health law would probably reframe the Democratic conversation on health policy away from moving beyond the Affordable Care Act toward Republican efforts to take health care away. That message, a driving force in the 2018 midterm campaigns, could resonate more broadly than the party’s current arguments over expanding coverage.

“Democrats will do better talking about what Trump can take away than about their new policy visions,” said Chris Jennings, a longtime Democratic adviser on health care. “The Texas case may reframe discourse around health policy more toward that type of discussion, which of course Republicans will hate.”

The law’s most popular provision is protections for people with pre-existing medical conditions, but it includes much more, such as health insurance exchanges where people can buy private coverage with subsidies, an expansion of Medicaid and requirements for what insurance must cover, from emergency services to prescription drugs.

The appeals court panel could decide to partly reverse Judge Reed O’Connor of the Federal District Court in Fort Worth, affirming that the mandate that most Americans have health insurance is unconstitutional but rejecting Judge O’Connor’s ruling that the rest of the law cannot stand without it. That would cause barely a ripple, because the tax penalty for not having insurance was reduced to zero in the 2017 tax overhaul and the effects have been negligible.

But a ruling that upheld his decision in full, or even one that said the mandate and pre-existing condition protections had to go, would send shock waves through the health care and political systems. Either outcome would probably play into Democratic hands, especially in contests against vulnerable Republicans like Senators Martha McSally of Arizona, Cory Gardner of Colorado, Susan Collins of Maine and Thom Tillis of North Carolina.

Republicans are not conceding that possibility. Asked how a ruling against the law might affect members of the party seeking re-election, the spokesman for the House Republican campaign arm, Chris Pack, said: “Both Democrats and Republicans oppose Obamacare. The only difference is that Democrats want to replace it with socialized single-payer health care that makes private health insurance illegal.”

In fact, most Democrats would welcome a renewed debate over the Affordable Care Act. Many Democrats in Congress have resisted Medicare for all; instead they have sought to shore up the existing health law and trap Republicans on pre-existing conditions. Senator Chuck Schumer of New York, the Democratic leader, intends to force a floor vote as soon as next week on a resolution to overturn a Trump rule that lets states promote skimpy-but-inexpensive insurance plans that do not meet the law’s coverage standards.

The vote, Mr. Schumer said Tuesday on the Senate floor, “will present our Republican colleagues with a choice: whether to protect Americans with pre-existing conditions or not to protect them.”

Mr. Trump is in a box on health care, the issue that registers as a top priority for voters in poll after poll. He wants deals on ending surprise medical bills and lowering prescription drug prices, but the Senate and House are far apart on what drug price legislation they would agree to, and impeachment proceedings could derail any chance of bipartisan measures.

Public support for the health law remains high, driven in part by swing voters. And few Americans believe Mr. Trump will offer details of a new health care plan before the end of the year, according to a Kaiser poll released this week. They also doubt any plan he releases would offer “better care at lower costs,” as he has promised.

Alex M. Azar II, the secretary of health and human services, has repeatedly played down the importance of expanding coverage to the remaining uninsured; instead, he has said, Mr. Trump wants to improve the health care system for all Americans. His efforts thus far have mostly been directed at discrete groups of patients: a plan to reduce new H.I.V. infections by 75 percent over five years, for example, and another to move people with advanced kidney disease to home-based, instead of clinic-based, dialysis.

At oral arguments before the appeals court panel in July, a lawyer from the Justice Department indicated the Trump administration would seek a stay if the panel upheld Judge O’Connor’s decision. The losing side could appeal directly to the Supreme Court, increasing the chances of a ruling or at least oral arguments before that court in the final months of the presidential campaign. Alternatively, it could first ask for a hearing by the full appeals court, which would slow down the process.

The appeals panel could also send the case back to Judge O’Connor to reconsider, an option that August Flentje, a lawyer for the Justice Department, embraced during oral arguments. That would also draw out the court fight.

When the six-week open enrollment period starts next month, there will be more insurers offering plans through the Affordable Care Act markets. Premiums have stabilized, too, after a few years of price increases. But it will be a much lower-profile effort than in past years; the Trump administration has cut the budget for both advertising and enrollment help. As a result, a court ruling against the law would paralyze open enrollment if people assume there is no use buying or renewing coverage under a law that was ruled unconstitutional, and if no effort is mounted to counter that misunderstanding.

“It will require a doubling down, a dramatic increase in education — which is exactly the opposite of what this administration has done,” said Leslie Dach, executive director of Protect Our Care, a consumer advocacy group aligned with Democrats. “Someone will need to educate people that low-cost, quality health insurance is still available to them.”

 

 

 

 

Heads Up: A Ruling On The Latest Challenge To The Affordable Care Act Is Coming

https://www.npr.org/sections/health-shots/2019/10/12/769038397/heads-up-a-ruling-on-the-latest-challenge-to-the-affordable-care-act-is-coming?fbclid=IwAR3g7_yZtBbywVWukbTC0PmcInHcioxPcF9Y5LsWYLpEH5Gs-3ZgBGgINVM

A decision in the latest court case to threaten the future of the Affordable Care Act could come as soon as this month. The ruling will come from the panel of judges in the 5th Circuit Court of Appeals, which heard oral arguments in the Texas v. Azar lawsuit.

An estimated 24 million people get their health coverage through programs created under the law, which has faced countless court challenges since it passed.

In court in July, only two of the three judges — both appointed by Republican presidents — asked questions. “Oral argument in front of the circuit went about as badly for the defenders of the Affordable Care Act as it could have gone,” says Nicholas Bagley, a professor of law at the University of Michigan. “To the extent that oral argument offers an insight into how judges are thinking about the case, I think we should be prepared for the worst — the invalidation of all or a significant part of the Affordable Care Act.”

Important caveat: Regardless of this ruling, the Affordable Care Act is still the law of the land. Whatever the 5th Circuit rules, it will be a long time before anything actually changes. Still, the timing of the ruling matters, says Sabrina Corlette, director of the Center on Health Insurance Reforms at Georgetown University.

“If that decision comes out before or during open enrollment, it could lead to a lot of consumer confusion about the security of their coverage and may actually discourage people from enrolling, which I think would be a bad thing,” she says.

Don’t be confused. Open enrollment begins Nov. 1 and runs at least through Dec. 15, and the insurance marketplaces set up by the law aren’t going anywhere anytime soon.

That’s not to underplay the stakes here. Down the line, sometime next year, if the Supreme Court ends up taking the case and ruling the ACA unconstitutional, “the chaos that would ensue is almost possible impossible to wrap your brain around,” Corlette says. “The marketplaces would just simply disappear and millions of people would become uninsured overnight, probably leaving hospitals and doctors with millions and millions of dollars in unpaid medical bills. Medicaid expansion would disappear overnight.

I don’t see any sector of our health care economy being untouched or unaffected,” she adds.

So what is this case that — yet again — threatens the Affordable Care Act’s very existence?

A quick refresher: When the Republican-led Congress passed the Tax Cuts and Jobs Act in 2017, it zeroed out the Affordable Care Act’s penalty for people who did not have health insurance. That penalty was a key part of the Supreme Court’s decision to uphold the law in 2012, so after the change to the penalty, the ACA’s opponents decided to challenge it anew.

Significantly, the Trump administration decided in June not to defend the ACA in this case. “It’s extremely rare for an administration not to defend the constitutionality of an existing law,” says Abbe Gluck, a law professor and the director of the Solomon Center for Health Law and Policy at Yale University. “The administration is not defending any of it — that’s a really big deal.”

The basic argument made by the state of Texas and the other plaintiffs? The zero dollar fine now outlined in the ACA is a “naked, penalty-free command to buy insurance,” says Bagley.

Here’s how the argument goes, as Bagley explains it: “We know from the Supreme Court’s first decision on the individual mandate case that Congress doesn’t have the power to adopt a freestanding mandate, it just has the power to impose a tax.” So therefore, the argument is that “the naked mandate that remains in the Affordable Care Act must be unconstitutional.”

The case made by the plaintiffs goes further, asserting that because the individual mandate was described by the Congress that enacted it as essential to the functioning of the law, this unconstitutional command cannot be cut off from the rest of the law. If the zero dollar penalty is unconstitutional, the whole law must fall.

Last December, a federal judge in Texas agreed with that entire argument. His judgement was appealed to the panel of judges in the 5th Circuit. Even if those judges agree that the whole law is unconstitutional, that would not be the end of the story — the case will almost certainly end up before the Supreme Court. It would be the third case to challenge the Affordable Care Act in the nation’s highest court.

So if the ruling will be appealed anyway, does it matter? “It matters for at least two reasons,” Bagley says. “First of all, if the 5th Circuit rejects the lower court holding and decides that the whole law is, in fact, perfectly constitutional, I think there’s a good chance the Supreme Court would sit this one out.”

On the other hand, if the 5th Circuit invalidates the law, it almost certainly will go the Supreme Court, “which will take a fresh look at the legal question,” he says. Even if the Supreme Court ultimately decides whether the ACA stands, “you never want to discount the role that lower court decisions can play over the lifespan of a case,” Bagley says.

The law has been dogged by legal challenges and repeal attempts from the very beginning, and experts have warned many times about the dire consequences of the law suddenly going away. Nine years in, “the Affordable Care Act is now part of the plumbing of our nation’s health care system,” Bagley says. “Ripping it out would cause untold damage and would create a whole lot of uncertainty.”

 

 

 

These are the judges holding Obamacare’s future in their hands

https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2019/07/02/the-health-202-these-are-the-judges-holding-obamacare-s-future-in-their-hands/5d1a5add1ad2e552a21d51e8/?utm_term=.a44fbc001f82

Image result for aca in court

The future of Obamacare is at stake next week, when the country’s most conservative appeals court will consider whether to uphold a ruling striking down the whole law. But the politically fraught, high-stakes case is at least likely to get a fair hearing by three judges whose names were announced yesterday, legal experts say.

Two of the judges were GOP-appointed; they include Jennifer Walker Elrod, a George W. Bush appointee, and Kurt Damian Engelhardt, an appointee of President Trump. But they’re known for being some of the more measured and thoughtful members of the U.S. Court of Appeals for the 5th Circuit, distinct from other judges who might be more politically inclined.

“There’s no doubt there are a couple firebrand jurists out there … but none of those judges are on this panel,” New Orleans litigator Harry Morse, who has argued before Engelhardt, told me.

“There’s nothing about these three that strikes me that they’ll be looking for headlines or take a stand on anything other than their fair reading of the law,” he added. “They’re all pretty careful folks.”

A third judge, Carolyn Dineen King, was appointed by former Democratic president Jimmy Carter. She, along with Elrod and Engelhardt, will hear oral arguments on July 9 in the closely watched lawsuit brought by nearly two dozen GOP-led states who are trying to unravel the ACA, even after it survived years of court challenges and repeal attempts in Congress.

It’s a deeply disturbing situation for California and other Democrat-led states defending the health-care law, who fear its consumer protections and insurance expansions could be wiped out in a moment. They’ve stepped up to defend the law because President Trump’s Justice Department is refusing to do so — even though a decision overturning the law would create a logistical and political mess for the administration.

The states, led by Texas, were certainly strategic in where they mounted the challenge. The 5th Circuit — whose 16 active judges include 11 appointed by Republicans — is widely viewed as being more sympathetic to Republican arguments that the ACA must now be struck down because Congress repealed the basis for its constitutionality, the individual mandate to buy coverage.

Because the panels are chosen randomly, it would have been unlikely for the trio hearing next week’s ACA lawsuit to include three or even two judges appointed by Democrats. The Elrod-Engelhardt-King panel is a good reflection of the 5th Circuit’s overall makeup, said Barry Edwards, a lecturer at the University of Central Florida who has written about U.S. appeals courts.

“I’d say the Democratic states were hoping for a better panel, but this is the panel they expected,” Edwards said.

Engelhardt was sent to the 5th Circuit by Trump, who relies heavily on recommendations from the influential Federalist Society. But he was initially made a federal district judge by George W. Bush, indicating he may not be as far to the political right as the judges Trump tends to favor, Edwards told me.

Engelhardt has been on the 5th Circuit for a little more than a year, while Elrod has been on its bench since 2007.

Even those familiar with the 5th Circuit find it hard to predict how the panel will land on last year’s district court ruling striking down the entire ACA, the decision the states are appealing. Its ruling will have bearing on whether the Supreme Court agrees to hear yet another challenge to the ACA, after upholding most of the law in 2012 and then again in 2015.

Edwards guesses the appeals court will upheld the lower-court decision scrapping the health-care law — a scenario in which the Supreme Court would almost certainly take up the case, given how many people the law has touched. But Morse said it’s hard for him to believe the judges would agree to strike down the ACA given how many times it has survived past legal challenges.

“I know it’s two Republican judges and one Democratic judge, but the ACA has been challenged twice in front of the Supreme Court,” Morse said. “The argument being made is the ACA can’t survive without the individual mandate, and Congress has implicitly rejected that.”

Nicholas Bagley, a law professor at the University of Michigan who has watched the case closely, said he’s certain the Supreme Court will hear the case if the 5th Circuit strikes the law. But he doesn’t expect a SCOTUS review if it leaves the law in place.

“If the panel reverses, I’m not at all sure that the Supreme Court will take the case,” Bagley wrote me in an email. “It’s that goofy.”

Last week, before the judges’ names were announced, the appeals court questioned whether the Democratic-led states and the U.S. House have the right to appeal the lower-court decision striking the law. Bagley and some other legal scholars interpreted the request as boding poorly for the law’s future, while others said it was a reasonable request, my Washington Post colleague Yasmeen Abutaleb reported.

 

ACA Litigation Round-Up: Risk Corridors, CSRs, AHPs, Short-Term Plans, And More

https://www.healthaffairs.org/do/10.1377/hblog20190523.823958/full/?utm_campaign=HASU&utm_medium=email&utm_content=ACA+Litigation+Round-Up%3B+Medication+Overload%3B+Surprise+Billing%3B+Uncertainty+About+DACA+And+Its+Impact+On+Health%3B+Recognizing+Trauma+In+The+Healer&utm_source=Newsletter

Litigation over various parts of the Affordable Care Act (ACA) and related regulations continues. ACA challenges are now under consideration by the Supreme Court and federal appellate and district courts across the country. This post provides a status update on ongoing litigation over the risk corridors program, cost-sharing reductions, the risk adjustment program, association health plans, and short-term plans. A previous post discussed the status of litigation over the contraceptive mandate.

Risk Corridors

As regular readers know, insurers sued the Department of Health and Human Services (HHS) for failure to make more than $12 billion in outstanding risk corridors payments. Lower court rulings were mixed. In June 2018, a three-judge panel of the Federal Circuit held that the government did not have to pay insurers the full amount owed to them in risk corridors payments. By a 2-1 majority, the court concluded that the ACA required the government to make risk corridors payments, but this obligation was suspended by subsequent appropriations riders that required these payments to be budget neutral.

The insurers’ request for en banc review by the Federal Circuit (meaning the case would be reheard by the entire Federal Circuit bench) was denied in November 2018. The insurers then petitioned the Supreme Court to hear their appeal in early February 2019. The petitions from the four insurers can be found here: Moda Health PlanBlue Cross and Blue Shield of North CarolinaLand of Lincoln, and Maine Community Health Options. The case is focused on whether Congress can use the appropriations process to amend or repeal substantive statutory payment obligations and whether these changes can be applied retroactively.

In early March, an array of stakeholders filed nine amici briefs, all in support of the Supreme Court hearing the cases. Briefs were filed by the U.S. Chamber of CommerceAmerica’s Health Insurance Plans, the Blue Cross Blue Shield Association, the National Association of Insurance Commissioners, the Association for Community Affiliated Plans19 state attorneys general led by Oregonsix insurers led by Highmark, and economists and professors.

The federal government’s response was initially due on February 4 but the Trump administration requested and received two extensions to file its response on May 8, 2019. In its opposition brief, the federal government asks the Supreme Court not to accept the appeal. The brief includes many of the same arguments made in the lower courts. In the government’s view, it was not required to make full risk corridor payments under the ACA because there was no appropriation to make such payments. Even if there was an obligation to do so, this obligation was subsequently eliminated by appropriation riders added by Congress. The federal government asks the court to look at the congressional history and context of the appropriations riders in precluding HHS from making full risk corridor payments.

The insurers have one more opportunity to respond before the Supreme Court considers whether to accept the appeal or not. If the Supreme Court does not agree to hear the case, the ruling by the Federal Circuit will stand, and insurers will not receive the more than $12 billion they are seeking.

Cost-Sharing Reduction Payments

In a related challenge, insurers have sued HHS for at least $2.3 billion in unpaid cost-sharing reduction payments (CSRs) since the Trump administration decided to stop making the payments in October 2017. To date, six insurers—in front of three different judges at the Court of Federal Claims—have succeeded in their challenges over unpaid CSRs. One of these lawsuits, brought by Common Ground Healthcare Cooperative, is a class action that includes more than 90 insurers. More insurers are being added to the class action on a regular basis, including four March, four in April, and one in May.

Federal Circuit

Three of the cases—brought by Montana Health CO-OP, Sanford Health Plan, and Community Health Choice—have already been appealed to the Federal Circuit and were consolidated. This means the three cases will be heard and decided together by the same panel of judges. The federal government filed its opening brief on March 22. Montana Health CO-OP and Sanford Health Plan filed their brief on May 1. Other insurers with pending lawsuits for unpaid CSRs filed amicus briefs in support of the insurers. Amicus briefs were filed by Blue Cross Blue Shield of North Dakota, L.A. Health Care Plan, Molina, and Common Ground.

Rulings for Montana Health CO-OP and Sanford Health Plan were limited to unpaid CSRs for 2017. However, Judge Elaine D. Kaplan of the Court of Federal Claims suggested that insurers could recover for 2018 and beyond even if insurers had used silver loading to insulate themselves from losses. (In mid-April, both insurers filed new complaints before Judge Kaplan for unpaid CSRs for 2018. Montana Health CO-OP sued for an additional $27 million, and Sanford Health Plan sued for an additional $11 million. Judge Kaplan stayed both cases pending a decision in the Federal Circuit.) The third case, for Community Health Choice, includes unpaid CSRs for 2017 and 2018. The amount of unpaid CSRs for 2018 was agreed to by the federal government and estimated based on 2017 costs.

Lower Courts

At least nine cases for unpaid CSRs, including the class action lawsuit, remain pending in the Court of Federal Claims. Two additional cases, brought by Maine Community Health Options and Common Ground, remain before Judge Margaret M. Sweeney. Judge Sweeney previously held that the insurers were owed unpaid CSRs for 2017 and 2018 and recently allowed Maine Community Health Options to amend its complaint to include nearly $36 million in unpaid CSRs for 2018. Common Ground separately estimated that its class is owed more than $2.3 billion for 2017 and 2018.

These estimates notwithstanding, the final amount owed will be determined through the CSR reconciliation process. In theory, insurers will complete this process in May 2019 and then the court can enter a final judgment reflecting actual 2018 CSR amounts by June. Judge Sweeney directed the parties to file a status report proposing the amount due to the class for 2018 within seven days of when HHS notifies all of the CSR class members of actual 2018 payments.

In mid-April, the plaintiffs asked for an extension of HHS’s deadline for the CSR reconciliation process, arguing that some class members would not have sufficient time to complete the submission process by the May 3 deadline. Judge Sweeney denied this request but noted that the government assured the court that all class members who ask for an extension to May 31 will be granted one. If a class member cannot meet the extended May 31 deadline and the government refuses to provide an additional extension, the plaintiffs can refile their motion.

In a separate challenge, Judge Thomas C. Wheeler held that L.A. Health Care Plan was entitled to unpaid CSRs for 2017. While the parties disagreed on the amount owed, L.A. Care filed an amended complaint on March 29 to reflect unpaid CSRs for 2018 and 2019 in the amount of about $83.5 million. L.A. Care will no longer seek unpaid CSRs for 2017 because it received more in advance CSR payments in 2017 than it ultimately paid out.

Most other CSR lawsuits—with a few exceptions like the lawsuits brought by Blue Cross Blue Shield insurers in North Dakota and Vermont—have now been stayed pending a decision by the Federal Circuit. The lawsuit brought by Guidewell Mutual Holding Corporation (which includes Blue Cross and Blue Shield of Florida, Florida Health Care Plan, and Health Options) was recently stayed as was a lawsuit brought by Health Alliance Medical Plans. The lawsuit brought by Harvard Pilgrim Health Care was separately stayed , but the insurer received permission to file an amended complaint to include about $21.5 million in unpaid CSRs for 2018. Molina’s $160 million challenge remains stayed until after a final, non-appealable judgment is issued in Moda Health Plan.

Risk Adjustment Program

Litigation continues over the methodology used in the risk adjustment program. A lawsuit brought by New Mexico Health Connections (NMHC) resulted in the brief suspension of about $10.4 billion in 2017 risk adjustment payments. The suspension occurred after Judge James O. Browning set aside the part of the risk adjustment methodology that uses a statewide average premium from 2014 to 2018. He later denied a request from the federal government to reconsider and overturn this ruling.

The federal government then appealed the decision to the Tenth Circuit. In mid-February, the Tenth Circuit directed the parties to address whether the court has jurisdiction to review Judge Browning’s order and judgment. The court is interested in whether the judgment is ripe for review since Judge Browning vacated part of the risk adjustment methodology and remanded the case to HHS. The cases cited by the Tenth Circuit’s clerk suggest that courts have answered this question differently: some have treated remand to an agency as a final decision (meaning it is appealable) while others have not.

The federal government filed a revised opening brief on March 22, with a request for oral argument. The government reiterates the reasons why it adopted a statewide average premium and a budget-neutral risk adjustment program and argues that NMHC waived its objections because these issues were not raised during the rulemaking process. The government also takes issue with the district court’s decision to vacate parts of the rule entirely (as opposed to limiting its ruling to NMHC or New Mexico). The government believes vacatur was inappropriate, did not reflect a balance of equities or the public interest, and was nationally disruptive to the risk adjustment program.

This point was echoed in an amicus brief from America’s Health Insurance Plans and the Blue Cross Blue Shield Association, noting that vacating the entire rule was “not only inequitable, but also unworkable” and “needlessly and retrospectively pull[ed] the rug out from under health plans that have relied on the final risk adjustment rules.” The brief highlights the impracticalities of adjusting the risk adjustment methodology (and thus the billions of dollars in risk adjustment transfers and medical loss ratios) for 2014 to 2016. They encourage the court to remand the risk adjustment regulations to HHS, without vacating them, to allow the agency to provide an additional explanation for its methodology for the 2014 to 2016 benefit years. These organizations filed a similar statement with the district court after HHS unexpectedly froze risk adjustment payments for 2017.

NMHC filed its opening brief on April 22, taking issue again with HHS’ use of a statewide average premium and arguing that the district court’s remedy—to vacate part of the risk adjustment methodology—was appropriate. The federal government’s reply brief was due on May 13 but it requested and received an extension to June 3.

Second Challenge

Separately, HHS issued new final rules to justify its risk adjustment methodology for 2017 and 2018. In August 2018, NMHC filed a new lawsuit challenging the final rule on the 2017 risk adjustment methodology. This means there are currently two lawsuits pending against the federal government brought by NMHC over the risk adjustment program. In late January, the parties asked Judge Browning to stay the second lawsuit while the original lawsuit is on appeal to the Tenth Circuit.

Association Health Plans

In July 2018, a coalition of 12 Democratic attorneys general filed a lawsuit challenging the final rule to expand access to association health plans (AHPs). Judge John D. Bates of the District of Columbia ruled in March 2019 that the rule violated federal law and was “clearly an end-run around the ACA.” The court set aside the rule’s provisions related to working owners and commonality of interest and remanded the rule back to the Department of Labor (DOL) to determine how the regulation’s severability provision affected the remainder of the rule.

The Trump administration appealed the ruling to the Court of Appeals for the District of Columbia (D.C. Circuit) where a panel of judges will consider the legal questions anew. The DOL also issued guidance that lays out its enforcement stance for already-in-existence AHPs, directs AHPs to pay claims, and prohibits AHPs from marketing to or enrolling new members.

On May 9, the federal government asked the D.C. Circuit for an expedited appeal in light of the fact that some consumers have already enrolled in AHPs. The DOL estimates that there are tens of thousands of enrollees in AHPs, many of whose plans will end between September and December 2019. Although the guidance and enforcement stance noted above are designed to mitigate disruption for enrollees, the administration urged a swift appeal. The D.C. Circuit granted this request. The government’s opening brief is due on May 31; the plaintiffs will file their opening brief on July 15. Final briefs will be due August 8. Oral argument has not yet been scheduled.

Short-Term Plans

Litigation continues over a separate final rule that expanded access to short-term plans. In September 2018, a coalition of consumer advocates and safety-net health plans sued over the new rule, arguing that it is contrary to Congress’s intent in adopting the ACA and should be invalidated. In November 2018, the plaintiffs withdrew their request for a preliminary injunction, and the case proceeded to the merits. The parties traded briefs throughout February and March, and amicus briefs were filed in support of the plaintiffs by patient advocates, AARP, and a range of medical associations.

Judge Richard J. Leon of federal district court in D.C. held oral argument on May 21. Media reports suggest that Judge Leon expressed continued skepticism of the plaintiffs’ arguments and whether (and the degree to which) they are harmed by the final rule. The court questioned enrollment data presented by the safety net health insurers and suggested that more time is needed to assess the impact of the new rule. Judge Leon also focused on why Congress had not acted to curb enrollment in short-term plans after the ACA if they were so harmful. He hopes to issue his decision this summer.