Trump’s Next Phase on Health Care: Everywhere and Nowhere

https://www.bloomberg.com/opinion/articles/2019-07-09/trump-health-care-reform-he-s-everywhere-and-nowhere

A scattershot and at times contradictory approach to fixing the system is impeding progress.

A hodgepodge of news this week is telling the confusing and contradictory story of President Donald Trump’s efforts to change American health care.  

On Monday, a federal judge blocked the administration’s efforts to force drugmakers to disclose the often astronomical list prices of medicines in their TV ads. It was intended to shame pharma into lowering prices, and would have been the first of the Trump administration’s major drug-cost initiatives to actually take effect.

On Tuesday, oral arguments were set for a Department of Justice-backed case that could wipe out the Affordable Care Act. 

Wednesday will reportedly see the president reveal an ambitious set of initiatives intended to rein in spending on kidney costs. 

The kidney initiative is among the administration’s better notions, along with its effort to index some drug costs covered by Medicare to the lower prices available abroad. Yet even when the administration lands on a good idea in health care, it seems to get in its own way. The Trump-backed ACA lawsuit, for example, would directly undermine the kidney initiative and price-indexing plan. And while the president has a variety of other proposals in the works – from an effort to pass drug discounts directly to consumers to a plan to force hospitals to make their pricing transparent – many could be exposed to the kind of legal risks that killed the drug-ad initiative. It’s all part of a scattershot and often incoherent approach that isn’t as effective as it could be.

Take the kidney-care push: this area of treatment is costly in part because the current system incentivizes expensive care at dialysis centers that are largely run by two companies: DaVita Inc. and  Fresenius Medical Care AG. (Peter Grauer, the chairman of Bloomberg LP, is the lead independent director at DaVita.) The Department of Health and Human Services reportedly wants to change that dynamic with new payment models intended to shift patients to more cost-effective treatment at home. At least part of the administration’s ability to implement those models comes from the Center for Medicare and Medicaid Services’ Innovation Center, which was created by the ACA and is threatened by the lawsuit.

The contradictions don’t end there. People with end-stage kidney disease are covered by Medicare, so the lawsuit wouldn’t strip their coverage. However, the administration’s plan reportedly emphasizes intervening before people get to the point where they need dialysis or transplants. Killing the ACA is at direct odds with that goal. It would see millions lose insurance coverage, would eliminate protections for people with pre-existing conditions like chronic kidney disease, and crimp access to preventative care.

Though it is a long shot, the court case demonstrates the administration’s inconsistency in health care. Just about every health initiative would be harmed by the disruption that would result if this lawsuit succeeds, especially considering that the administration doesn’t have a replacement plan. If it were serious about keeping people off of dialysis or curing HIV, it would oppose this suit and stop other ongoing efforts that harm the ACA’s individual market and Medicaid.

The administration hasn’t detailed an ACA alternative because its previous effort to pass one was a political disaster that helped Democrats seize control of the House of Representatives in 2018. Instead, its health-care efforts have largely been confined to executive orders and rule-making. That approach narrows the scope of what the administration can accomplish, and comes with significant risks. If a federal judge thinks that forcing the disclosure of drug prices in ads is an overreach, there’s clearly a chance that the administration’s more ambitious plans will also have issues.

I’m rooting for the kidney effort. It targets a real problem and could have an impact, depending on the details. I’d be more optimistic about the plan’s chances if it were part of a cohesive set of policies that had Congressional backing, rather than the current jumble. 

Judge rules against Trump on drug pricing disclosures

https://thehill.com/policy/healthcare/452092-judge-rules-against-trump-on-drug-pricing-disclosures

Image result for federal judge ruling on drug price transparency

A federal judge on Monday sided with a coalition of drug companies and blocked the Trump administration from implementing a policy that would require prescription drug manufacturers to disclose list prices in TV ads.

The pharmaceutical companies — Amgen, Merck, and Eli Lilly — were joined in the lawsuit by the Association of National Advertisers. The rule was scheduled to take effect Tuesday.
U.S. District Court Judge Amit P. Mehta in Washington, D.C., agreed with the drug companies that the Department of Health and Human Services (HHS) does not have the authority to compel drug companies to disclose prices.

“To be clear, the court does not question HHS’s motives in adopting the [rule],” Mehta wrote. “Nor does it take any view on the wisdom of requiring drug companies to disclose prices. That policy very well could be an effective tool in halting the rising cost of prescription drugs. But no matter how vexing the problem of spiraling drug costs may be, HHS cannot do more than what Congress has authorized. The responsibility rests with Congress to act in the first instance.”

Under the rule, which was announced by HHS Secretary Alex Azar in May, drug manufacturers would have to state the list price of a 30-day supply of any drug that is covered through Medicare and Medicaid and costs at least $35 a month.

Azar argued that forcing drugmakers to disclose their prices in direct-to-consumer TV advertising could shame companies into lowering their prices. In announcing the rule, Azar said there’s no reason patients should be kept in the dark about the full prices of the products they’re being sold.

“Patients have a right to know, and if you’re ashamed of your drug prices, change your drug prices. It’s that simple,” Azar said in May when the administration announced the final rule.

Drug companies fought the rule from the start, arguing it would confuse consumers because a drug’s list price — which doesn’t reflect the discounts negotiated with insurers or through patient assistance programs — is often higher than what the patient actually pays.

PhRMA, the nation’s top drug lobby, wants its members to disclose pricing on separate websites.

The companies also argued that the rule violates their First Amendment rights. However, Mehta’s ruling noted that because the agency did not have the authority to issue the rule in the first place, the First Amendment claim was not valid.

In a statement, HHS spokeswoman Caitlin Oakley said the administration was “disappointed” in the ruling.

“We are disappointed in the court’s decision and will be working with the Department of Justice on next steps related to the litigation,” Oakley said.  “Although we are not surprised by the objections to transparency from certain special interests, putting drug prices in ads is a useful way to put patients in control and lower costs.”

 

SUPREME COURT TAKES UP $12B DISPUTE OVER ACA RISK CORRIDOR PAYMENTS

https://www.healthleadersmedia.com/finance/supreme-court-takes-12b-dispute-over-aca-risk-corridor-payments

U.S. Supreme Court

The justices agreed to hear arguments over whether Congress can pass riders that withhold funds in contravention of the relevant law’s intent without actually repealing the relevant law.


KEY TAKEAWAYS

The health plans argue the ACA’s mandate to issue risk corridor payments could not be repealed through an appropriations rider.

The approximately $12 billion in payments at issue in this dispute are for three benefit years: 2014-2016.

The U.S. Supreme Court agreed Monday to take up three consolidated cases from health plans challenging Congress’ refusal to authorize $12 billion in risk-mitigation payments under the Affordable Care Act.

The cases—which were brought by Maine Community Health Options, Moda Health Plan Inc., and Land of Lincoln Mutual Health Insurance Co.—argue that the ACA’s risk corridor program obligated Health and Human Services to make payments that the law intended “to induce insurer participation in the health insurance exchanges by mitigating some of the uncertainty associated with insuring formerly uninsured customers.”

Following the 2014 midterm election, lawmakers on Capitol Hill enacted an appropriations law for fiscal year 2015 that “would potentially allot money to HHS to cover” any such payments for the 2014 benefit year, but the law included a rider that required HHS to maintain the budget neutrality of the risk corridor program, the health plans said in their petition.

Because the amounts collected under the risk corridor program for 2014 “came nowhere close to what the government owed to insurers,” the government paid out only 12.6% of the total owed for the year, prorating the funds it owed to each insurer, the health plans wrote.

Similar riders were included in appropriations bills for fiscal years 2016 and 2017. But HHS used the funds it collected from benefit years 2015 and 2016 to further pay what it owed from the 2014 benefit year, making no payments for the 2015 and 2016 benefit years, the health plans wrote. (The program ended after three years.)

The health plans proposed two questions in the petition for a writ of certiorari for the justices to consider, but the justices agreed to hear argument only on the first: “Given the ‘cardinal rule’ disfavoring implied repeals—which applies with ‘especial force’ to appropriations acts and requires that repeal not be found unless the later enactment is ‘irreconcilable’ with the former—can an appropriations rider whose text bars the agency’s use of certain funds to pay a statutory obligation, but does not repeal or amend the statutory obligation, and is thus not inconsistent with it, nonetheless be held to impliedly repeal the obligation by elevating the perceived ‘intent’ of the rider (drawn from unilluminating legislative history) above its text, and the text of the underlying statute?”

In its response to the health plans’ petition, the U.S. government argued that a Government Accountability Office report identified only two possible sources of funding for the risk corridor payments: (1) the funds collected by HHS under the program itself, and (2) any lump-sum appropriation to manage certain Centers for Medicare & Medicaid Services programs. By enacting the appropriations laws as it did, Congress said that only the first funding source would be allowed, the response states.

America’s Health Insurance Plans (AHIP) President and CEO Matt Eyles said in a statement that insurers need stability from the government.

“Millions of Americans rely on the individual and small group markets for their coverage and care. Health insurance providers are committed to serving these patients and consumers, working with the federal government to deliver affordable coverage and access to quality care,” Eyles said. “The Supreme Court’s decision to hear this case recognizes how important it is for American businesses, including health insurance providers, to be able to rely on the federal government as a fair and reliable partner. Strong, stable and predictable partnerships between the private and the public sector are an essential part of our nation’s economy, and our industry looks forward to having this matter heard before the Court.”

The justices allotted one hour for oral argument on the dispute.

 

 

 

Wonky Supreme Court Ruling on Medicare DSH Formula to Affect More Than Money

https://www.healthleadersmedia.com/strategy/wonky-supreme-court-ruling-medicare-dsh-formula-affect-more-money?spMailingID=15780781&spUserID=MTg2ODM1MDE3NTU1S0&spJobID=1660471453&spReportId=MTY2MDQ3MTQ1MwS2

Moving forward, the government will have to complete notice-and-comment rulemaking for a broader set of its decisions.


KEY TAKEAWAYS

Monday’s decision by the Supreme Court kicks the dispute back to the District Court level. What happens next is unclear.

Beyond the money at stake, this case increases the rulemaking burden on HHS and CMS, though the extent of that burden is disputed.

Hospitals that treat high numbers of low-income patients secured a big win this week at the U.S. Supreme Court.

Seven of the justices agreed that officials in the U.S. Department of Health and Human Services stepped out of line when they rejiggered a Medicare reimbursement formula for disproportionate share hospitals (DSH) five years ago without a formal notice-and-comment process.

The decision carries implications well beyond the money hospitals say they are owed.

“It’s a big deal for the hospitals, obviously,” says Helen R. Pfister, JD, a New York–based partner with Manatt Health.

By the government’s estimates, the dispute implicates $3-4 billion in payments over nine years. That’s how much more the Centers for Medicare & Medicaid Services would have paid in DSH reimbursements, had the formula not been changed, according to court records.

“But I think it’s also a big deal in terms of the fact that the Supreme Court has clearly indicated that, going forward, CMS is going to have to do notice-and-comment rulemaking for a much more expansive set of agency decisions than they thought and argued in this case that they would need to do,” Pfister adds.

Precisely how much of the routine work completed by HHS and CMS will be affected by this broader take on notice-and-comment rulemaking remains to be seen. While some stakeholders have raised concerns the added burden could stifle the government’s work, others contend any inconvenience imposed will be both manageable and beneficial.

In any case, the impact of Monday’s decision will flow along two distinct paths, affecting not only hospital finances but also, for better or worse, the way HHS and CMS operate.

What’s Next, Procedurally?

In 2016, nine hospitals led by Allina Health Services lost their case against HHS at the U.S. District Court in D.C., where a judge ruled that notice-and-comment rulemaking wasn’t required. In 2017, however, three judges at the D.C. Circuit Court of Appeals reversed the lower court’s decision and sent the dispute back for further proceedings.

In 2018, attorneys for HHS asked the Supreme Court to review the appellate decision. Now that the justices have affirmed the Circuit Court’s decision, the parties have up to seven days to file a status report at the District Court level on where the case stands, according to court records. That filing, expected by early next week, could shed light on where things are headed procedurally.

Pfister says she doesn’t think anyone knows for the time being whether the government will automatically revise DSH payments for the affected fiscal years, pursue another round of notice-and-comment rulemaking, or take some other course of action in response to the Supreme Court ruling.

And the parties themselves aren’t saying much. When asked about the agency’s plans, a CMS spokesperson told HealthLeaders on Wednesday that the agency is still reviewing the decision. Allina referred questions to its law firm, which declined to comment.

Beyond the nine plaintiff hospitals involved in this week’s Supreme Court decision, there are hundreds of plaintiffs suing HHS on similar grounds. Dozens of follow-on lawsuits have been consolidated into a single docket pending before U.S. District Judge Amy Berman Jackson. Parties to that proceeding have up to 14 days to file a status report in light of the Supreme Court’s decision, according to court records.

An Overly Burdensome Decision?

The government’s attorneys had issued dire warnings about the potential consequences of the decision the Supreme Court ultimately reached.

The notion that CMS must go through a notice-and-comment process for the sort of routine process at issue in this case could “substantially undermine effective administration of the Medicare program” because it would apply not just to DSH formula calculations but to “nearly every instruction” the agency gives to its contractors as well, U.S. Solicitor General Noel J. Francisco argued on HHS’ behalf.

Pfister largely rejects the government’s dire take on the decision’s impact.

“I think that might have been a little bit hyperbolic,” she says.

But other stakeholders outside the government have taken the Supreme Court’s ruling as a troubling sign of uncertainty to come.

“This is a frightening decision, that throws a lot of doubt on the validity of thousands of pages of Medicare sub-regulatory guidance,” Adam Finkelstein, JD, MPH, counsel with Manatt Health and a former health insurance specialist with the CMS Innovation Center, wrote in a tweet.

Stephanie A. Kennan, senior vice president of federal public affairs for McGuire Woods Consulting in Washington, D.C., tells HealthLeaders that she thinks the government’s argument “is somewhat overblown.” Officials should be able to manage any added burden from this ruling, even if it slows them down a bit, she says.

“I think it may mean they cannot move as quickly on some policies as they would like to,” Kennan says.

A Boon to Public Input?

The benefits of a more-transparent process justify any added hassle that may stem from having to go through a mandatory comment process more often as a result of this decision, Kennan says.

“In this case, they have to do 60-day comment periods, which can seem like an eternity if you want to keep the process moving, regardless of whether you’re the agency or a stakeholder,” she says. “The transparency is probably worth the 60 days.”

But others reject the notion that this decision should be seen as balancing effective governance with transparency.

“Allina isn’t a vindication of the importance of public participation in agency decision-making. It’s a testimonial to the heedlessness of lawyers who impose silly procedural rules on an administrative state they only dimly understand,” Nicholas Bagley, JD, a law professor at the University of Michigan who teaches on administrative law and health law, wrote in a series of tweets.

“Bear in mind,” he added, “that CMS is a tiny, beleaguered agency … To further encumber it will make Medicare more capricious, not less, as staffers tend to senseless procedures instead of doing their jobs.”

Moving forward, HHS and CMS will continue to have discretion to determine whether to go through notice-and-comment with a given action, Pfister says. The difference now, she says, is that there’s a stronger incentive for government officials to cover themselves; otherwise, another case like Allina’s could pull them into another round of prolonged litigation.

 

 

Oral arguments to be heard in birth control coverage case

Image result for birth control coverage case

A federal judge in California will hear oral arguments today in a case that could decide whether employers can refuse to provide certain health services that go against their religious beliefs.

Following a 2011 HHS mandate that required employers to provide certain health care — including birth control and emergency contraception — the Catholic nonprofit Little Sisters of the Poor sued in 2013 to be exempt from the rule, but five years and lengthy court battles later, the case is still ongoing.

New HHS rules created in 2017 allowed for religious exemptions for employers, including the group run by nuns, but 13 states and the District of Columbia sued to block the rules.

Two judges in January temporarily blocked the rules from going into effect, and today’s hearing will decide whether those injunctions will stay in place.

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.