Can States Fill the Gap if the Federal Government Overturns Preexisting-Condition Protections?

https://www.commonwealthfund.org/blog/2019/can-states-fill-gap-preexisting-condition-protections

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Once again, the Affordable Care Act (ACA) is under threat, this time in the form of Texas v. Azar, a federal lawsuit challenging its constitutionality. This litigation, now under consideration by the Fifth Circuit Court of Appeals, took an unexpected turn in March when the U.S. Department of Justice (DOJ) sided with the plaintiffs, urging the Court to strike the ACA down in its entirety.

On May 1, the administration filed a brief in support of this action. But even before this suit, DOJ had refused to defend key provisions that guarantee coverage of preexisting conditions. If the courts agree with the DOJ, it would invalidate every provision of the 2010 law.

As many as 20 million people nationwide would lose their coverage, while millions more could face insurance company denials, premium surcharges, or high out-of-pocket costs because of their health status.

ACA Protections for People with Preexisting Conditions

  • Guaranteed issue. Health insurers are prohibited from denying an individual or employer group a policy based on their health status.
  • Community rating. Health insurers may not use an individual or small employer group’s health status to set premiums.
  • Preexisting condition exclusions. Health insurers and employer group plans are prohibited from refusing to cover services needed to treat a preexisting condition.
  • Essential health benefits. Health insurers selling to individuals and small employers must cover a minimum set of 10 “essential” benefits: ambulatory services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; and pediatric services, including oral and vision care.
  • Cost-sharing protections. Health insurers and employer group plans must cap the amount enrollees pay out-of-pocket for health care services each year.
  • Annual and lifetime limits. Health insurers and employer group plans are prohibited from imposing annual or lifetime dollar limits on essential health benefits.
  • Preventive services. Health insurers and employer group plans are required to cover evidence-based preventive services without any enrollee cost-sharing.
  • Nondiscrimination. Health insurers must implement benefit designs for individuals and small employers that do not discriminate based on age, disability, or expected length of life.

To help blunt potential fallout and prevent adverse effects for millions of individuals, several states are enacting bills to ensure that federal ACA protections become part of state law (see box). However, before the ACA, state efforts to require insurers to cover people with preexisting conditions resulted in large premium spikes and, in some cases, caused insurers to exit the market.

The ACA’s premium subsidies have had a critical stabilizing effect. If those subsidies are invalidated, states will have a hard time restoring them with state dollars. In addition, state regulation of self-funded employer plans is preempted under the federal Employee Retirement Income Security Act (ERISA), meaning the 61 percent of people with this type of job-based coverage can regain their protections under the ACA only if Congress steps in to restore them.

States Are Stepping Up, but Power to Fully Protect Consumers Is Limited

In a previous post, we found that at least four states (Colorado, Massachusetts, New York, and Virginia) had laws that would preserve key ACA preexisting-condition protections if the federal law is overturned. Since that time, seven more states (Connecticut, Hawaii, Indiana, Maine, Maryland,1 New Mexico, and Washington) have acted to preserve the ACA’s protections for their residents.

These bills take different approaches. Maine, New Mexico, and Washington passed comprehensive bills that would preserve all the protections listed above. The Connecticut, Hawaii, and Indiana laws are more narrowly focused. Hawaii and Indiana prohibit insurers from imposing preexisting condition exclusions; Connecticut aligns its benefit standards with the ACA. Maryland took a different approach, creating a workgroup to recommend ways to protect residents if the ACA is struck down. The governors of New Jersey and Rhode Island have issued executive orders directing their state agencies to uphold the ACA’s principles, by guarding against discrimination based on preexisting conditions and strengthening consumer protections to ensure access to affordable coverage.

Looking Forward

The Fifth Circuit Court of Appeals is expected to hear arguments in Texas v. Azar in July. Whatever that court decides, the losing party is likely to ask the Supreme Court to hear the case, and a ruling could come as soon as June 2020. With the future of the ACA hanging in the balance, at least 14 other states are considering legislation codifying some of the federal consumer protections during their 2019 sessions.

 

 

 

Trump administration appeals association health plan ruling

https://www.fiercehealthcare.com/payer/dept-labor-defends-rights-small-businesses-to-expanded-health-plans?mkt_tok=eyJpIjoiTXpCbFpXWXpPR1JtTTJSayIsInQiOiIyUWdwd0NuaU9YSUFYcmg1UnlDUm84Tk4yXC8weWpLOG5hT0lXWHJSRjIzMllDUFZmU05XSFpKWmRrQ3R0NjhPV3VSbk5KTFVYbEdPMXZmMHF1Q0JRbCtRNzZzSWFPV1Y2N1hnMmpRVlNtS1wvNmRZSE1YREZnbUNLM3ZnMXE2ejhBIn0%3D&mrkid=959610

Gavel court room lawsuit judge

The Trump administration will appeal a judge’s ruling that struck down much of its rule expanding association health plans (AHPs).

The rule made it easier for an association of employers to establish an employee welfare plan—regulated under the Employee Retirement Income Security Act (ERISA) and the Affordable Care Act—as a single employer plan. In other words, small employers can work together with others in their industry or geographic area to purchase a larger health plan.

The Department of Labor filed a notice of appeal (PDF) Friday.

Eleven states and the District of Columbia filed a lawsuit saying that the definition of “employer” in ERISA was not reasonable. A federal district court agreed and set aside regulations for qualifying associations, saying that the Labor Department failed to put a limit on the types of associations that can qualify to sponsor an AHP.

“This appeal is welcomed by associations across the country who have invested their time, money and reputation to launch health plans under the 2018 regulation,” Kev Coleman, president and founder of AssociationHealthPlans.com, said in a statement. “This regulation marked a watershed in health policy inasmuch as it corrected a basic unfairness existing in health coverage costs between small companies and large companies.”

Critics, meanwhile, argue the plans offer skimpy coverage that can leave consumers at risk.

Currently, there are an estimated 30,000 small-business employees and their dependents using these plans. According to a 2019 healthcare survey by AssociationHealthPlans.com, four out of five respondents supported small businesses working together to offer large company health insurance plans.

In Congress, Sens. Chuck Grassley, R-Iowa, and Joni Ernst, R-Iowa, joined Sen. Mike Enzi, R-Wyoming, in introducing legislation to prevent small business employees from losing their healthcare coverage. The legislation would ensure a pathway for small businesses to offer AHPs under the Labor Department’s final rule.

 

 

 

 

California Appellate Decision Limits Hospital’s Options For Exclusive Contracts

Click to access d3180be0-b816-4328-86e7-74776fe15b8a.pdf

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On February 4, 2019, the California Court of Appeal affirmed a judgment awarding plaintiff, Dr. Kenneth Economy, substantial damages for his suspension and subsequent termination of his staff privileges at defendant Sutter East Bay Hospitals. The Court of Appeal held that, because Dr. Economy’s termination, even though done under the provisions of an exclusive contract, was based on “medical disciplinary cause or reason,” he was entitled to prior notice and a hearing in accordance with Business and Professions Code section 809 et seq. This decision flies in the face of the underlying premise for exclusive contracts: the ability for a hospital to enter into a contractual arrangement that allows it to set superior metrics in exchange for exclusive rights to provide services. Clinical issues have long been mandated to be within the purview of the medical staff but exclusive contracting gives hospitals the ability to contract for higher standards of quality of care. The severity of the Economy decision calls into question the accepted approach to exclusive contracts.

Background

Dr. Economy was an anesthesiologist who had practiced at Sutter East Bay Hospital for 20 years. The hospital operated a “closed” anesthesiology department pursuant to a contract with the East Bay Anesthesiology Medical Group (“East Bay Group”). Under the contract, East Bay Group exclusively provided administrative and coverage services to the hospital’s anesthesiology departments. Importantly, the parties’ contract authorized the hospital to require that East Bay Group immediately remove from the schedule any physician whose actions jeopardized the quality of care provided to the hospital’s patients. In July 2011, Dr. Economy was found responsible for numerous violations that jeopardized patient safety. Consequently, the hospital’s peer review committee recommended to East Bay Group that Dr. Economy complete a continuing education course through the Physician Assessment and Clinical Education (“PACE”) program. Dr. Economy completed the PACE program. Despite this additional training, he was once again found to have performance issues related to clinical care. The hospital then asked East Bay Group to remove Dr. Economy from its schedule pursuant to the parties’ contract. East Bay Group complied and later terminated his employment. Dr. Economy filed suit against the hospital alleging, among other things, a violation of his right to notice and a hearing under Business and California Professions Code section 8091 as well as his common law right to fair procedure.

Trial Court Finds in Favor of Dr. Economy

The trial court found that the hospital’s action of removing Dr. Economy from the anesthesia schedule was indisputably based on a medical disciplinary cause or reason, which ultimately constituted a summary suspension of his right to exercise his privileges and use the hospital’s facilities. The trial court found that the hospital’s failure to provide Dr. Economy with notice of the charges against him and an opportunity for hearing amounted to a violation of Section 809.5, as well as his common law right to fair procedure. Although the trial court awarded Dr. Economy approximately $4 million in damages, it denied his request for attorney’s fees and costs as a prevailing party under Section 809.9.

Court of Appeal Upholds Trial Court Decision

On appeal, the hospital argued that East Bay Group was not a “peer review body” within the meaning of Section 805 and therefore Dr. Economy’s suspension and termination did not trigger a duty to file a report with the state licensing board or to provide a hearing mandated by such reportable actions, which hearings are triggered by medical staff actions. The hospital also argued, to no avail, that Dr. Economy was not entitled to notice and hearing because he was terminated by his employer, East Bay Group, rather than the hospital. The Court of Appeal was not persuaded by the hospital’s arguments and held that the hospital’s request that Dr. Economy be removed from its anesthesiology schedules was tantamount to a decision to suspend and ultimately revoke his privileges. Because the hospital’s contractual terms with East Bay Group prohibited anesthesiologists from performing services at the hospital if not employed or scheduled by the group, the hospital’s decision effectively terminated his right to exercise clinical privileges at the hospital. Under the hospital’s medical staff bylaws, such a decision could be made only by its medical executive committee (“MEC”) after the provision of notice and an opportunity for hearing before the peer review committee. In Economy, it was undisputed that the hospital did not provide notice or a hearing, nor did the MEC review Dr. Economy’s disciplinary action. The Court also concluded the hospital did not delegate its peer review duties to East Bay Group under the terms of their contract. Indeed, the Court specifically noted that the hospital’s medical staff bylaws did not require or authorize a closed department to conduct peer review in lieu of the procedures set forth in its bylaws. The Court further noted that there was no evidence that East Bay Group had any policies or procedures for the conduct of peer reviews. The Court of Appeal reasoned that the hospital was therefore the entity solely responsible for reviewing physician performance pursuant to the contractual relationship. Accordingly, its failure to provide Dr. Economy with notice and an opportunity for hearing was a violation of his statutory and common law rights to due process. The Court of Appeal held that the hospital’s request to remove Dr. Economy from East Bay Group’s anesthesia schedule ultimately constituted a summary suspension of his right to exercise his privileges—a deprivation which could only lawfully be undertaken by way of formal peer review in accordance with Sections 805 and 809.

The Court of Appeal further reasoned that if the hospital were permitted to contract with third-party employers such as East Bay Group, who could suspend and terminate a physician without complying with statutory due process requirements, then a hospital could essentially avoid compliance with such statutes altogether, which would be contrary to public policy. Although it found that Dr. Economy was entitled to notice and a hearing, the Court of Appeal denied his request for attorney’s fees and costs, finding that the hospital’s defense was not frivolous, unreasonable, without foundation, or asserted in bad faith.

Exclusive Contracting in the Wake of Economy

As the Court of Appeal acknowledged in footnote 3, “[h]ospitals often enter into closed or ‘exclusive contracts . . . with healthcare entity-based physicians such as pathologists, radiologists, and anesthesiologists, . . . for a variety of reasons including (1) improving the efficiency of the healthcare entity; (2) standardization of procedures; (3) securing greater patient satisfaction; (4) assuring the availability of specific services; (5) cost containment; and (6) improving the quality of care.’ (citing to Health Law Practice Guide (2018) Exclusive Contracts, § 2:24.)” However, the Court of Appeal in Economy clearly took issue with the means by which the hospital enforced the provisions of its contract with East Bay Group. It is unknown at this point whether this case will be appealed to the California Supreme Court. Certainly, there are numerous factual distinctions to be made when considering the ramifications of Economy and every situation would require a careful case by case analysis. However, if Economy stands, it will require careful analysis and should encourage hospitals to consider the parameters of their exclusive contract relationships, the terms of those contracts, and even reweigh the benefits of closed departments in connection with their specific circumstances. At the very least, it is apparent that in the wake of Economy a more conservative approach will be to defer clinical issues to the medical staff for any necessary determinations and action.

 

Supreme Court to hear DSH payments case

https://www.healthcaredive.com/news/supreme-court-to-hear-dsh-payments-case/533427/

Dive Brief:

  • The U.S. Supreme Court agreed Thursday to review an appellate court ruling that HHS improperly changed the reimbursement formula for Medicare disproportionate share hospital payments.
  • The crux of the case is whether HHS violated federal law by making the change in the DSH reimbursement calculation without public notice and comment.
  • At stake for HHS is up to $4 billion in DSH reimbursements made between FY 2005 and 2013. 

Dive Insight:

Policy changes since 2010 have cut payments to hospitals by billions of dollars, a report earlier this year from consulting firm Dobson DaVanzo & Associates forecast, with a prediction the cuts would reach $218.2 billion by 2028.​

The cuts include $25.9 billion for Medicaid Disproportionate Share Hospital (DSH) payments, a key source of financing for hospitals that serve low-income populations.

HHS petitioned the high court to hear the case after the D.C. Circuit Court of Appeals ruled in favor of Minneapolis-based Allina Health Services and a group of hospitals. The decision, written by embattled Supreme Court nominee Brett Kavanaugh, overturned a lower court ruling that sided with HHS.

In his 2017 opinion, Kavanaugh concluded that HHS violated the Medicare Act when it revised its reimbursement adjustment formula with going through the usual rulemaking process. In particular, he rejected the government’s argument that the notice-and-comment requirement for regulations setting or modifying a “substantive legal standard” does not apply to “interpretive rules.

Kavanaugh also held that HHS erred in including Medicare Part C enrollees with Part A enrollees in its new DSH payment calculations.

“That difference in interpretation makes a huge difference in the real world,” Kavanaugh wrote. “Part C enrollees tend to be wealthier than Part A enrollees. Including Part C days in Medicare fractions therefore tends to lead to lower reimbursement rates. Ultimately, millions of dollars are at stake for the Government and the hospitals.”

In its petition, HHS maintains that the appellate court’s decision would “significantly impair” its ability to administer annual Medicare reimbursements through the third-party contractors it employs to pay hospitals.

“The court of appeals’ decision threatens to undermine HHS’s ability to administer the Medicare Program in a workable manner,” the petition states. Given the time and cost involved in formal rulemaking, “converting the agency’s non-binding manuals and other interpretive materials into regulations requiring notice and comment would jeopardize the flexibility needed in light of Medicare’s complex and frequently changing statutory context and administrative developments.”

 

 

Patient’s $7,800 ED bill reaches California Supreme Court

https://www.beckershospitalreview.com/finance/patient-s-7-800-ed-bill-reaches-california-supreme-court.html

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A case involving a hospital patient’s emergency department bill has been initiated at the California Supreme Court, a spokesperson for the Judicial Council of California confirmed to Becker’s.

He said the supreme court received a petition for review from the patient, and it has at least 60 days to decide whether it will grant, deny or take other action.

The petition centers on an unpublished opinion by the Fifth District Court of Appeal issued in July that would allow self-pay patients treated at Community Regional Medical Center in Fresno, Calif., and Clovis (Calif.) Community Medical Center to challenge their medical expenses as part of a class action, The Fresno Bee reported.

The appeals court decision reversed a trial court order denying class certification; directed certification of an “issue class”; and denied the the patient’s request to publish the opinion. But now the patient has petitioned the supreme court to get the opinion published. “Unpublished or ‘noncitable’ opinions are opinions that are not certified for publication in official reports and generally may not be cited or relied on by other courts or parties in other actions,” the spokesperson for the Judicial Council of California said. However, if the case were published, it would become case law, potentially affecting lawsuits against hospitals statewide.

Hospital officials have argued the case should not be published.

The case goes back to a dispute over interpretation of Community Regional Medical Center’s admissions contract and the rates charged to an uninsured emergency room patient, Cesar Solorio, according to the appeals court decision. Mr. Solorio reportedly received X-rays and a splint on his wrist at the hospital on Sept. 22, 2015. He later received a bill for $7,812.03 and filed a class-action complaint alleging rates billed to self-pay patients are “inflated and exorbitant,” the appeals court decision states.

Community Medical Centers, the operator of Community Regional Medical Center and Clovis Community Medical Center, disputes claims that the self-pay billing process is different from insured patients, according to The Fresno Bee.

Michelle Von Tersch, vice president of communications and public affairs, told the publication documents regarding a patient’s treatment are reviewed to determine applicable charges after discharge. She said that many uninsured patients are eligible for financial aid programs, such as charity care.

Read the full Fresno Bee report here.

 

Anthem loses Cigna takeover appeal

http://www.healthcaredive.com/news/anthem-cigna-merger-over/441551/

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Dive Brief:

  • The U.S. Court of Appeals on Friday upheld a decision to block the $54 billion merger between insurance giants Anthem and Cigna.
  • A federal judge ruled in February that the combined company would result in reduced competition in the national health insurance market, agreeing with the U.S. Department of Justice, which brought the antitrust case last July. Anthem filed an appeal to reverse the decision later that month.
  • In a 2-1 decision, the court ruled Anthem had failed to “show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger.”

Dive Insight:

Unless Anthem takes it to the Supreme Court, this is the end of the deal after several months of contentious debates and infighting among the two health insurance giants.

The healthcare industry has been closely watching the case. The American Medical Association was quick to issue a statement applauding the decision from the Court of Appeals. “The appellate court sent a clear message to the health insurance industry: a merger that smothers competition and choice, raises premiums and reduces quality and innovation is inherently harmful to patients and physicians,” said AMA President Andrew W. Gurman.

Cigna has been wanting to end the merger plans for months. After the merger was first blocked, Cigna filed a lawsuit against Anthem seeking at least $14 billion in damages, which is a lot more than the $1.85 billion contractual breakup fee. It also asked for a statement that Cigna had lawfully terminated the deal.

Anthem was granted a temporary restraining order against Cigna shortly thereafter. The infighting certainly did not help support Anthem-Cigna’s argument that it would effectively implement the claimed efficiencies that would benefit consumers.

Earlier this week, Anthem filed a motion with the Delaware Court of Chancery for a preliminary injunction that would block Cigna from terminating the deal on April 30, which is the contractual deadline.

Anthem and Cigna could soon end their plan to merge. Once it’s over, it will be “harder for either Anthem or Cigna to do another deal that involves a combination of another large insurer,” Mitchell Raup, an antitrust attorney from Polsinelli, told Healthcare Dive. “They would have to convince the Department of Justice or perhaps a court that the next deal is not like this deal, that the judge’s opinion about this deal doesn’t apply to the next deal.”

Also this week, Anthem released first quarter 2017 earnings showing it beat projections with $1 billion in net income. It also said it would cautiously begin work on 2018 rates for the Affordable Care Act exchanges. Anthem and other payers, however, are still anxiously awaiting word from the President Donald Trump administration on whether it will continue the cost-sharing reduction subsidies.

Healthcare Dive requested comments from both payers. Anthem has not yet sent a statement. Cigna, through a company lawyer, said it has no comment at this time. An 8-K Cigna filed earlier today just states that it “continues to work through the litigation process in the pending Delaware Court of Chancery matter involving Cigna and Anthem, including the preliminary injunction hearing scheduled for May 8, 2017.”

After beating Gov. Rick Scott in court, hospital appointee quits post

http://www.tampabay.com/news/politics/stateroundup/after-beating-gov-rick-scott-in-court-hospital-appointee-quits-post/2273311?utm_medium=nl&utm_source=internal&mkt_tok=eyJpIjoiTURjNU56QmxORGd4WmpoaiIsInQiOiJtZkFGUkQ1UVlcL3RZR3pPa0dFQ3E0c2xrczBBdVdYVDNZa1JkSzV5ZVRzOWc2NjBPdlNnVUpLbHhUbUNybkVibmlSU2d0K2NZVTBXeTBDQzUzM2pVZUo2aDBwR0E0MGdJNGJFYk5BQWZCSVk9In0%3D

David Di Pietro resigned Thursday from his role as board chairman of tax-supported hospitals in Broward County.
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[South Florida Sun Sentinel]

David Di Pietro resigned Thursday from his role as board chairman of tax-supported hospitals in Broward County.