In latest filing, HHS argues there’s a broader principle at play than the potential reimbursements totaling up to $4 billion.
As the U.S. Supreme Court prepares to consider this fall whether to take up a case implicating potentially billions of dollars in Medicare payments, hospitals that provide high rates of uncompensated care are lining up to ask the federal government for their piece of the pie.
The D.C. Circuit Court ruled less than a year ago that Health and Human Services violated the Medicare statute by failing to conduct a notice-and-comment rulemaking process when it implemented a policy affecting disproportionate-share hospital (DSH) reimbursements. Since then, providers have filed about 30 lawsuits in the D.C. District Court raising similar claims, according to a filing submitted Thursday to the Supreme Court on HHS Secretary Alex Azar’s behalf.
Some of the suits include dozens of plaintiffs. Most of them have been stayed pending the Supreme Court’s next move.
“The monetary stakes and hospitals’ legal sophistication will likely lead to future cases raising similar issues being litigated in the District of Columbia, where the decision below constitutes binding precedent,” Solicitor General Noel J. Francisco wrote in the filing, arguing that the Supreme Court should take the case so HHS may argue that the appellate court’s decision should be overruled.
The respondents—who argued the Supreme Court should deny the HHS request and let the Circuit Court decision stand—include just nine hospitals, but their claims for a single year total $48.5 million in additional reimbursement. Considering that about 2,700 hospitals receive DSH payments, the financial stakes surrounding this case are clearly quite high.
Although the appellate court sided with the hospitals’ claim that HHS broke the law by skipping notice-and-comment rulemaking, the latest HHS filing argues that the ruling was faulty and that there’s a broader issue at play.
The respondents both “miss the point and are wrong” about the legal standard, the HHS filing states.
“They miss the point because the logic of the decision below would apply to any context in which the agency gives its contractors interpretive instructions about making initial reimbursement decisions,” the filing states, noting that providers have the option to challenge initial cost-reporting determinations.
In other words, if HHS is required to engage in notice-and-comment rulemaking to calculate DSH reimbursements, then it must be required to do the same in other matters that would make running Medicare and other programs unworkable, HHS argues.
The Supreme Court is set to consider in a conference September 24 whether to take up the case.
The retirement of Supreme Court Justice Anthony Kennedy has triggered a political earthquake in Washington, as Republicans see a chance to cement a conservative majority and Democrats fear a potential overturn of abortion rights and anti-discrimination laws, and even — possibly — challenges to the Affordable Care Act. Kennedy has been the deciding vote in dozens of cases over his long career on the high court, mostly siding with conservatives but crossing ideological lines often enough that liberals see him as the last bulwark against challenges from the right to many policies.
The Supreme Court made other health news this week, ruling that California cannot require anti-abortion “crisis pregnancy centers” to post signs informing women of their right to an abortion and telling them that financial help is available.
And this is a special week for us. It’s our first anniversary. This week’s panelists for KHN’s “What the Health?” are Julie Rovner of Kaiser Health News, Rebecca Adams of CQ Roll Call, Alice Ollstein of Talking Points Memo and Margot Sanger-Katz of The New York Times.
Among the takeaways from this week’s podcast:
Kennedy’s retirement will put all eyes on the Senate, where Republicans have a slim majority but have also changed the rules to allow confirmation with only 51 votes instead of the usual 60.
The fight over Kennedy’s replacement is likely to galvanize both Republicans and Democrats, but also put in the hot seat the two Republican female senators who have supported abortion rights — Susan Collins of Maine and Lisa Murkowski of Alaska.
This week’s primaries again put the spotlight on Democratic support of single-payer health proposals, as Alexandria Ocasio-Cortez upset the fourth-ranking Democrat in the House in New York and former NAACP head Ben Jealous won the Democratic nomination for governor in Maryland. But while Democrats have made clear that health is their top issue for the coming campaign, they have so far managed to paper over their intraparty differences on incremental versus wholesale change.
The California legislature could vote on a measure as soon as Thursday that would gut efforts by municipalities to put in place soda taxes. If it passes, it will mark a change in momentum away from the success of these measures across the country. The soda industry took a page from the tobacco companies in executing this plan.
The controversy surrounding the Trump administration’s immigration policy that separates children from their parents at the border continued to be a flashpoint this week. Health and Human Services Secretary Alex Azar was questioned about it on Capitol Hill during a hearing about drug pricing. Congressional Republicans find themselves in a difficult position. Many don’t want to defend the administration, but there doesn’t seem to be an avenue by which to move forward either.
Whistleblower lawsuits had alleged that the Florida-based wound care specialist knowingly filed bogus claims to Medicare for services that weren’t needed.
Healogics, Inc. will pay up to $22.51 million to settle whistleblower allegations that billed Medicare for medically unnecessary and unreasonable hyperbaric oxygen therapy, the Department of Justice said.
Jacksonville, FL-based Healogics manages nearly 700 hospital-based wound care centers across the nation.
The settlement resolves allegations that from 2010 through 2015, Healogics knowingly submitted false claims to Medicare for medically unnecessary or unreasonable HBO therapy, DOJ said.
Healogics will pay $17.5 million, plus an additional $5 million if certain financial contingencies occur within the next five years, for a total potential payment of up to $22.51 million. The company has also has entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General.
“When greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised,” said HHS OIG Special Agent in Charge Shimon R. Richmond.
The settlement came as the result of whistleblower lawsuits filed by a former executive at Healogics, and a separate suit filed by two doctors and a former program director who worked at Healogics-affiliated wound care centers. The four whistleblowers are expected to share $4.2 million of the settlement.
A federal appeals court ruled the federal government does not have to make risk corridor payments, dealing a blow to insurers that claim they are owed billions in payments under the Affordable Care Act.
In a closely watched case brought by Moda Health Plans, the three-judge panel for the United States Court of Appeals for the Federal Circuit reversed a decision by the Court of Federal Claims, ruling that the Department of Health and Human Services is not obligated to make risk corridor payments to insurers under the ACA.
The payments were built into the ACA as a way to protect insurers from extreme gains or losses on the ACA exchanges in a market that was still untested by insurers.
“Although section 1342 obligated the government to pay participants in the exchanges the full amount indicated by the formula for risk corridor payments, we hold that Congress suspended the government’s obligation in each year of the program through clear intent manifested in appropriations riders,” wrote Chief Judge Sharon Proust in the decision (PDF). “We also hold that the circumstances of this legislation and subsequent regulation did not create a contract promising the full amount of risk corridors payments.”
The court acknowledged the section of the ACA requiring the HHS Secretary to establish risk corridor payments is “unambiguously mandatory,” but said Congress included appropriations riders during each of the program’s three years to ensure risk corridor payments were budget neutral.
The court added that the program “lacks the trappings of contractual agreement,” rebuffing Moda Health’s argument that HHS is required to make payments.
In a statement to FierceHealthcare, Moda Health President and CEO Robert Gootee said the insurer plans to appeal the decision.
“We are disappointed by today’s decision,” he said. “If it is upheld on appeal, it will effectively allow the federal government to walk away from its obligation to provide partial reimbursement for the financial losses Moda incurred when we stepped up to provide coverage to more than 100,000 Oregonians under the ACA. We continue to believe, as our trial court did, that the government’s obligation to us is clearly stated in the law and we will continue to pursue our claim on appeal.”
In a dissenting opinion, Judge Pauline Neman argued that the appropriations riders did not cancel out HHS’s obligation to make risk corridor payments. She said the court’s decision “undermines the reliability of dealings with the government.”
So this isn’t the end of the road for insurers, and there’s some good language in the majority opinion about their statutory entitlement. But it’s a Michigan-size pothole in their path to getting paid.
Dozens of insurers have sued the government to reclaim billions in unpaid risk corridor payments. Moda Health claimed it is owed $214 million, while Blue Cross Blue Shield of North Carolina filed for nearly $150 million in unpaid payments and Humana claims its owed $611 million.
Significant legal challenges have marked the history of the Affordable Care Act (ACA) since its passage in 2010, and have largely determined the outlines of the law’s current structure. Similarly, as Sara Rosenbaum argues in a brief published this week, the courts have substantially shaped the Medicaid program over its 53-year history. Two recent legal challenges have potentially far-reaching implications for both the Affordable Care Act and the Medicaid program, and the millions of Americans who depend on them for their health insurance. While the plaintiffs take different positions regarding the ACA and Medicaid, the cases and the Trump Administration’s responses to them reveal an executive branch that is consistent in its efforts to reduce the federal government’s role in guaranteeing health insurance coverage for Americans.
Stewart v. Azar
Oral arguments in U.S. District Court for the District of Columbia begin today in a class action lawsuit brought by 15 Kentucky Medicaid enrollees. The case challenges the legality of several aspects of Kentucky’s 1115 Medicaid demonstration waiver, which allows the U.S. Department of Health and Human Services (HHS) and states to test time-limited innovations in Medicaid and other public welfare programs without congressional action. Set to go into effect on July 1, the Kentucky waiver’s most controversial provision is the requirement that Medicaid beneficiaries work or perform community service for at least 80 hours per month to retain coverage. The suit also challenges the authority of HHS, now led by Secretary Alex Azar, to both encourage and approve Medicaid work demonstrations generally and the approval of Kentucky’s demonstration in particular. The suit also challenges the legality of other aspects of the waiver, including the imposition of premiums, the use of six-month lock-out periods for beneficiaries who don’t comply with work requirements or pay their premiums on time, and the elimination of Medicaid’s requirement that new beneficiaries receive three months of retroactive coverage. Three other states have received approval for similar waivers, seven states have applications under review at the Centers for Medicare and Medicaid Services, and several others are developing them. Because the case challenges both the Kentucky waiver and HHS policy, it has implications for these states, as well as the future of the Medicaid program.
A critical issue highlighted by the case goes to the heart of the entitlement nature of the Medicaid program. Under the Medicaid Act and subsequent amendments, Congress has determined certain groups of people to be eligible for Medicaid coverage by virtue of their age, income, or health needs. These mandatory coverage groups include children, pregnant women, and the elderly, blind and disabled. Because working-age adults with low incomes were the least likely to work in a job that comes with health benefits, the ACA created a new mandatory eligibility category for adults with income less than 138 percent of the federal poverty level. The Supreme Court decision in 2012 effectively made this optional for states. But once a state elects to cover people who fall into this group, individuals at this income level become a mandatory coverage group. Kentucky expanded eligibility for this group in 2014, and most, but not all, of its waiver provisions apply only to this group. The lawsuit argues that suspending a beneficiary’s coverage for failure to comply with the new waiver requirements would be in violation of their entitlement to coverage under the Medicaid Act. In public speeches, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma, also named as a defendant in the suit, has maintained that Congress’s decision to expand eligibility for Medicaid to “able-bodied” adults was a departure from the historical mission of the program and that states should have the opportunity to alter that through work and other requirements. While the vast majority of adults who have coverage through the ACA’s Medicaid expansion have jobs, work requirements will likely impose significant administrative barriers that could trigger eligibility losses even among those working full time. Estimates of coverage losses range from 95,000 to nearly 300,000 people in Kentucky. Because low-income workers remain the least likely group in the U.S. workforce to have coverage through their jobs, many will likely become uninsured.
Texas v. Azar
Secretary Azar is also the defendant in this case, brought by Texas and 19 other Republican-led states. So-called amici, or friend of the court briefs, are due today and several groups have filed briefs. The suit claims that Congress’s repeal of the individual mandate penalty renders the individual mandate — still part of the ACA — unconstitutional. Because the mandate is essential to the operation of the law, the case argues that the entire law is invalid. In an extraordinary departure from executive branch precedent — and as noted by Tim Jost — Attorney General Jeff Sessions notified Congress last Thursday that the administration agreed with the plaintiffs that the individual mandate was unconstitutional. Because of this, the administration argues that insurers selling policies in the individual market can no longer be banned from denying people coverage or charging higher premiums because of their health, gender, or age. However, the administration maintains that other parts of the law, including the Medicaid expansion, are not affected.
Looking forward
Taken together, these cases underscore the Trump Administration’s ongoing interest in reducing the number of people covered under the Affordable Care Act by withdrawing federal support for the law. Today’s oral arguments in the Stewart case will provide early indications as to how the courts will view the administration’s actions. The insurance coverage of millions of Americans and the future of the Medicaid program are at stake.
The Trump administration has released the language of a proposed rule on federal family planning funding, and abortion rights activists are raising alarm about it.
When health officials revealed Friday that they would be filing a change to which clinics would be eligible for funding, they emphasized that it was not a “gag rule.” Instead, they said they were proposing to strip away a current mandate. It requires organizations that receive Title X funding to counsel women about abortion and provide them with referrals to abortion services. Under the new rules, a provider wouldn’t have to talk about abortion at all.
This was part of a plan that would require “a bright line of physical as well as financial separation” between Title X family planning programs and ones in which abortion is “supported or referred for as a method of family planning.”
“Contrary to recent media reports,” the White House said in a statement that day, “HHS’s proposal does not include the so-called ‘gag rule’ on counseling about abortion.” The statement contrasted the new rule with a Reagan administration policy in 1988 that banned any mention of abortion.
The Department of Health and Human Services declined to make the full proposed rule available last week, but it was posted on the HHS website Tuesday. It’s consistent with the message the administration provided Friday but is more explicit about what can and cannot be said.
Page 119 states that “A Title X project may not perform, promote, refer for, or support, abortion as a method of family planning, nor take any other affirmative action to assist a patient to secure such an abortion.”
The one exception is if a woman “clearly states that she has already decided to have an abortion.” In this situation, a doctor or other provider should provide “a list of licensed, qualified comprehensive health service providers (some, but not all, of which also provide abortion, in addition to comprehensive prenatal care.)”
So is it or isn’t it a “gag rule”?
HHS’s view is that there is a difference between counseling and referrals. Counseling — as long as it is not “directive” or expressing an opinion — is allowed. It stated that referrals for abortion are, “by definition, directive” and, therefore, not allowed under its new interpretation of a 2000 regulation that pregnancy counseling be nondirective.
Planned Parenthood, which serves about 41 percent of the patients who receive services through Title X, and other groups that support abortion rights, beg to differ. On Wednesday, Planned Parenthood started a #NoGagRule campaign that will include a rally in front of the U.S. Capitol at 5:30 p.m.
“This is one of the largest-scale and most dangerous attacks we’ve seen on women’s rights and reproductive health care in this country. This policy is straight out of the Handmaid’s Tale — yet, it’s taking effect in America in 2018,” Dawn Laguens, executive vice president for Planned Parenthood Federation of America, said in a statement that referenced Margaret Atwood’s dystopian novel.
Georgeanne Usova, legislative counsel with the American Civil Liberties Union, said the policy is “putting the health and lives of countless people at risk in service of this administration’s extreme antiabortion agenda.”
Likewise Jenn Conti, a fellow with Physicians for Reproductive Health, said the ” ‘gag rule’ is not only unconscionable, but it undermines medical ethics by allowing health-care professionals to withhold accurate and timely medical information from patients.”
Former HHS Secretary Tom Price’s statements and new research from the Commonwealth Fund suggest the ACA brought more young people to insurance pool.
When the Affordable Care Act was initially passed, some thought that many people, high-income men in good health particularly, would be driven from the insurance market and that would indicate a failure on the part of the ACA’s individual mandate. Instead the opposite appears to be true.
What’s more, former Health and Human Services Secretary Tom Price, MD, said publicly this week that when President Trump’s tax bill, which ends the individual mandate in 2019, kicks in insurance prices are going to rise.
Price’s statement comes after the uninsured rate dropped substantially at least when it comes to one studied demographic during the law’s first few years. Among 26-34-year-old men who earned more than 400 percent of the federal poverty level, the uninsured rate dropped from 11.7 percent in 2013 to 7.2 percent in 2015, according to new research by the Commonwealth Fund.
That’s actually greater than the drop in the uninsured rate of older men. Those between 55-64 also saw a reduction, but only from 3.9 to 2.5 percent.
Before the Affordable Care Act was enacted, young and healthy individuals in many states could purchase limited benefit packages at low premiums. The ACA mandated coverage and charged higher premiums to those not covered by federal subsidies.
Young, healthy males shouldered higher costs due to regulations that shifted the brunt of the cost away from disadvantaged groups, such as the poor and the elderly.
At the time of passage, some states had imposed rating rules for insurance coverage that sought to qualify more people for health subsidies, but the researchers found that when the ACA was passed, the percent of uninsured men that didn’t qualify for subsidies dipped at about the same rate in all states, regardless of whether they had enacted those rules.
The positive impact on young, high-earning men was credited by authors to financial penalties and effective marketing, but the Trump administration has cut the ACA marketing budget by $90 million. Just $10 million is now earmarked for that purpose.
“There are many, and I’m one of them, who believe that [the tax bill] will harm the pool in the exchange market,” Price said at the World Health Care Congress on Tuesday. “Because you’ll likely have individuals who are younger and healthier not participating in that market, and consequently, that drives up the cost for other folks.”
Lower court’s decision about disproportionate share hospital payments undermines the ability HHS has to administer Medicare reimbursement, Azar says.
Health and Human Services Secretary Alex Azar asked the U.S. Supreme Court to review an appeals court case won by numerous hospitals over disproportionate share hospital payments.
Azar said the decision affects between $3 and $4 billion in Medicare funding and therefore, the Supreme Court’s review is warranted.
At issue is whether the Centers for Medicare and Medicaid Services needed to go through a notice and comment rulemaking to get stakeholder feedback before deciding on its own to include Medicare Advantage beneficiaries in its calculations for DSH payments.
Medicare pays hospitals for providing inpatient care and gives an additional payment known as disproportionate share hospital adjustment to hospitals that serve a significantly disproportionate number of low-income patients.
The payment is based on two percentages. The first is a Medicare fraction, which is calculated using the number of patient days for patients who are entitled to benefits under Medicare Part A and for supplemental Social Security income benefits.
The second percent includes patient days attributable to patients who are not entitled to benefits under Medicare Part A.
Medicare Advantage, or Medicare Part C, established in 1997, allows individuals to receive benefits under Parts A and B through enrollment in a private MA plan.
Prior to 2004, CMS did not count a hospital’s Medicare Part C patient days when calculating the Medicare fraction used to determine DSH payments. Starting in 2004, CMS made a decision on its own interpretation of a rule and determined Part C patients were entitled to benefits under Medicare Part A within the meaning of Medicare-fraction provisions.
Hospitals challenged CMS’ interpretation done without notice and comment rulemaking. A district court sided with the government, but in 2017 the U.S. Court of Appeals in the District of Columbia ruled with the hospitals.
The appeals court said HHS needed notice and comment rulemaking before providing Medicare Administrative Contractors the payment calculation that is passed on to hospitals.
The decision undermines its ability to administer the annual Medicare reimbursement process in a workable manner, HHS said.
“The D.C. Circuit’s contrary decision would significantly impair HHS’s ability to administer annual Medicare reimbursements through the MACs that act on its behalf,” the Supreme Court filing said. “It would also impose significant costs on the government. Just with respect to the Medicare-fraction issue in this case, the decision below affects between $3 and $4 billion in Medicare funding.”
Solicitor General Noel Francisco filed the petition in April on behalf of Azar, against health systems Allina Health Services, doing business as United Hospital, Unity Hospital and Abbott Northwestern Hospital; Florida Health Sciences Center dba Tampa General Hospital; Montefiore Medical Center; Mount Sinai Medical Center of Florida dba Mount Sinai Medical Center; New York Hospital Medical Center of Queens; New York Methodist Hospital; and New York Presbyterian Hospital and New York Presbyterian Hospital Weill Cornell Medical Center.
Business looked challenging for Novo Nordisk at the end of 2016. As pressure mounted over the pharma giant’s soaring insulin prices, investors drove its stock down by a third on fears that policymakers would take action, limit prices and hurt profits.
Then things got worse. A Massachusetts law firm sued the company and two other pharma firms on behalf of patients, claiming that high insulin prices of hundreds of dollars a month forced diabetics to starve themselves to minimize their blood sugar while skimping on doses. At least five states began investigating insulin makers and their business partners.
As scrutiny rose, Novo Nordisk engaged in what analysts say is a time-honored response to public criticism. It aggressively ratcheted up spending to spread its influence in Washington and to have a louder say in the debates over drug prices.
The drugmaker’s political action committee spent $405,000 on federal campaign donations and other political outlays last year, more than in 2016 — an election year — and nearly double its allocation for 2015, data compiled by Kaiser Health News show.
“We remain committed to being part of the discussion,” said Tricia Brooks, head of government relations and public affairs for Novo Nordisk, acknowledging scrutiny over insulin prices but saying the company has many other issues to work on with policymakers. “I don’t want us to run away from it and hide or keep our head down and wait for it to roll over.”
Novo Nordisk also spent $3.2 million lobbying Congress and federal agencies in 2017, its biggest-ever investment in directly influencing U.S. policymakers, according to the Center for Responsive Politics.
Part of that surge included summoning more than 400 Novo Nordisk employees to contact lawmakers and their staffs on Capitol Hill, “a huge increase from anything we’ve ever done before,” Brooks said.
Taken together, the increases represent a “major corporate policy shift” for the company and appear to be a classic business response to growing political risk, said Kent Cooper, a former Federal Election Commission official who has tracked political money for decades.
The pharma industry as a whole has behaved similarly, cranking up political contributions and lobbying. Meanwhile, despite much talk about change, Congress and the Trump administration have done little to control drug prices or threaten drug-company profits.
Pharma businesses overall made political donations of $12.1 million last year, down from a $13.6 million election-year surge in 2016 but 9 percent higher than the haul for 2015, according to the KHN analysis. Pharma industry lobbying expenses surpassed $171 million last year, the highest level since 2009, during negotiations over the Affordable Care Act, according to CRP.
“It’s been hot in the health care arena for — how many years now?” said Steven Billet, who teaches lobbying and PAC management at George Washington University. “Anybody in this world now is sitting there thinking, “When I go back to the board next year, I’m going to ask for 15 percent more in my [lobbying and campaign finance] budget. Because this isn’t going away.’”
Like most big corporations, Novo Nordisk runs a political action committee, or PAC, which solicits employee donations and gives the proceeds to political candidates’ campaigns. The company is Danish. Only workers who are U.S. citizens or permanent residents are allowed to support the PAC.
Like many PACs, Novo Nordisk spreads money to both parties, concentrating on powerful committee members and other leaders. Since 2013 it has given $22,500 to House Speaker Paul Ryan, a Republican, and $20,472 to South Carolina’s James Clyburn, a member of the Democratic House leadership.
Brooks gave the PAC $4,370 last year, the data show. Some employees gave as little as $20 or $30.
The firm’s influence-seeking has grown along with its U.S. sales, which went from hundreds of millions of dollars in the early 2000s to some $9 billion last year. Its biggest business is diabetes, including various types of insulin whose list prices have more than doubled in recent years.
The wholesale list price for a vial of Novo Nordisk’s Levemir, a long-acting insulin, went from $144.80 in 2012 to $335.70 in January, when the price rose 4 percent, according to Connecture, a research firm.
Even Alex Azar, a former Eli Lilly executive who became Health and Human Services secretary in January, said in his confirmation hearing that “insulin prices are high, and they’re too high.” Along with Novo Nordisk and Sanofi, Lilly is one of the three big insulin makers under investigation by state attorneys general for price increases that seem suspiciously similar in size and timing.
Sanofi and Lilly both spent more last year on political donations and federal lobbying than Novo Nordisk. Lilly’s political spending was $548,100 for 2017, up 12 percent from 2015, the previous off-election year, the data show. Sanofi’s was $527,200, down from 2015.
But potential insulin price limits threaten Novo Nordisk more than those companies because diabetes-related drugs account for an exceptionally big portion of its business, analysts said. Several proposals under consideration by Congress could lower insulin prices or limit future increases.
One would allow the Medicare program for seniors to negotiate prices for covered drugs, thus lowering the cost.
Other proposals would make it easier for competing, “biosimilar” alternatives to break through the thicket of patents created by sellers of complex drugs such as insulin. Others would bring more transparency, requiring companies to publish and justify price increases.
None of the proposals has made it out of congressional committees. In the face of inaction by Washington, Novo Nordisk’s stock has recovered much of the ground it lost in 2016.
Novo Nordisk rejects suggestions that it coordinated price increases with competitors. So do Sanofi and Lilly.
List prices such as those tracked by Connecture don’t reflect what patients or their insurers ultimately pay, said Novo Nordisk spokesman Ken Inchausti. Growing discounts and rebates substantially reduced the reported list price, he said.
Even including discounts, however, the company’s net profit margin for 2017 was 34 percent, its highest since at least 2000, when it was half that high.
Official filings show Novo Nordisk lobbyists have been weighing in on numerous measures related to drug prices, including proposals to import less expensive drugs from Canada.
The company lobbies Washington on a wide range of issues including diabetes prevention, budget matters, chronic disease and making obesity an accepted medical disease that insurers will pay to prevent, Brooks said.
But last year’s increase in campaign donations and lobbying doesn’t look like business as usual for Novo Nordisk, said Billet, a former AT&T lobbyist who directs GWU’s Legislative Affairs program.
“I’m not surprised,” he said. “They’ve obviously had some issues recently. This is maybe a predictable enough element in their strategy.”
After months of debate, the Medicaid program emerged from efforts to repeal and replace the Affordable Care Act (ACA) without major legislative changes. Now, however, the Trump administration is encouraging states to apply for waivers that place new conditions on Medicaid eligibility as well as additional costs on beneficiaries in the form of premiums and copayments at the point of service.
To better understand the continuing controversy over Medicaid, let’s take a look at the waiver program’s objectives and how states have used waivers in the past. Are recently proposed state waivers consistent with Medicaid’s underlying mission? And are federal and state authorities appropriately evaluating them for their impact on Medicaid populations?
What is a Medicaid Section 1115 waiver?
Medicaid grants states autonomy in how they run their programs. Under a provision of the Social Security Act, Section 1115, the U.S. Secretary of Health and Human Services (HHS) can waive federal guidelines on Medicaid to allow states to pilot and evaluate innovative approaches to serving beneficiaries. Most waivers are granted for a limited period and can be withdrawn once they expire.
States seek 1115 waivers to test the effects of changes both in coverage and in how care is delivered to patients. The Centers for Medicare and Medicaid Services (CMS), a government agency, reviews each waiver application to ensure not only that it furthers the core objective of Medicaid — to meet the health needs of low-income and vulnerable populations — but also that the proposed demonstration does not require the federal government to spend more on the state’s Medicaid program than it otherwise would.
However, a recent General Accountability Office (GAO) review found that, because of significant limitations, evaluations of 1115 demonstrations often do not provide enough information for policymakers to understand the waivers’ full impact.1 The GAO recommended that CMS establish procedures to ensure that all states submit final evaluation reports at the end of each demonstration cycle, issue criteria for when it will allow limited evaluations of demonstrations, and establish a policy for publicly releasing findings from federal evaluations.
How have 1115 waivers been used in the past?
States have been granted waivers throughout the 53-year history of Medicaid. Most waivers were small in scope until the 1990s, when states started to use them for a wide range of purposes, including to: expand eligibility, simplify the enrollment and renewal process, reform care delivery, implement managed care, provide long-term services and supports, and alter benefits and cost-sharing. Some states have used 1115 waivers to change the way care is delivered to Medicaid patients, like encouraging investments in social interventions. Oregon, for example, used its waiver to establish Coordinated Care Organizations — partnerships between managed care plans and community providers to manage medical, behavioral health, and oral health services for a group of Medicaid beneficiaries.
With the ACA’s enactment, a new category of low-income adults became eligible for Medicaid. After the Supreme Court ruled in 2012 that this eligibility expansion was optional for states, eight states applied for 1115 demonstration waivers from the Obama administration to test different approaches to expanding eligibility, including the introduction of premiums and copayments that exceeded federal guidelines. One of those states, Arkansas, has used Medicaid funds to purchase private health insurance for marketplace enrollees.
How are 1115 waivers changing?
With encouragement from the Trump administration, many states are applying for waivers to make employment, volunteer work, or the performance of some other service a requirement for Medicaid eligibility. The administration has also encouraged waivers to impose premiums and increases in cost-sharing.
States can take different approaches to work or service requirements. Some might require them only for the Medicaid-expansion population (working-age adults with incomes up to 138 percent of the federal poverty level), while other states might also require employment of the traditional Medicaid population.
As of early April 2018, three states — Kentucky, Indiana, and Arkansas — have received approval for work- or service-requirement waivers. Seven others have pending waivers for new applications, amendments to existing waivers, or requests for renewals or extensions.
In Kentucky — the first state to have its work-requirement waiver approved — affected beneficiaries must complete 80 hours per month of community-engagement activities, such as employment, education, job skills training, or community service. Documentation of meeting this requirement is required to remain eligible for coverage. Exemptions are granted to pregnant women, people considered medically frail, older adults, and full-time students. Indiana and Arkansas have received approval for similar waivers.
Shortly after Kentucky’s waiver was approved, attorneys representing 15 Medicaid beneficiaries sued the HHS secretary in federal court (Stewart v. Azar), arguing that the objective of promoting work is not consistent with Medicaid’s core purpose of “providing medical assistance (to people) whose income and resources are insufficient to meet the cost of necessary medical services.”2 The lawsuit’s outcome will affect whether some of the state demonstrations will be able to proceed.
What’s the bottom line?
The 1115 demonstration waiver program is intended to fulfill the primary purpose of Medicaid: to provide health care protection to poor and disabled Americans. The new waivers seeking to impose work or service requirements, as well as others that would impose lifetime coverage limits or premiums, should be fully and carefully evaluated to determine whether they meet this goal. In addition to state and federal evaluations, independent assessments of state demonstrations will be important to informing policymakers and the public about the waivers’ full impact.
HENRY KOTULA 