Tag: Affordable Care Act

The ACA Twilight Zone

Death by a thousand cuts has been the Trump Administration’s approach to the Affordable Care Act (ACA).  To be sure, President Trump  tweeted on April 23, 2017 that “ObamaCare is in serious trouble.”  On October 13, 2017, he tweeted, “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”  On May 30, 2018, he stated: “For the most part, we will have gotten rid of a majority of Obamacare.”  And on June 4, 2018, he tweeted, “We had Repeal & Replace done (and the saving to our country of one trillion dollars) except for one person, but it is getting done anyway. Individual Mandate is gone and great, less expensive plans will be announced this month.”

In the courts, the ACA has certainly been no stranger to the artful attack.  But two lawsuits, one filed in Texas and the other in Maryland, have gained nationwide traction and hold nationwide consequences.  The first suit, Texas v. US, made its way to U.S. District Court Judge Reed O’Connor’s bench in the Northern District of Texas.  The 20-state GOP led suit was filed on February 26, 2018 by Texas Attorney General Ken Paxton.  It argues that since the ACA was only upheld by the Supreme Court in NFIB v. Sebelius because the individual mandate was a tax, and now that the Tax Cut and Jobs Act of 2017 (TCJA) zeroed-out the individual mandate penalty, the entire ACA is unconstitutional.  The Plaintiff-states also argue that since the ACA does not have a severability clause – a clause that would allow the rest of the statute to live if one part is stricken – the ACA as a whole must fall.

Under Attorney General Jeff Sessions direction, the government will not defend the ACA’s constitutionality.  Defending the ACA, and its patient protections like the prohibition on insurers from discriminating against patients with pre-existing conditions, are 17 Democratic attorneys general representing their respective states as Intervenor-Defendants.  A slew of patient groups and scholars filed amicus briefs in support of the Intervenor-Defendants, but only Citizens United filed as amicus in favor of the Plaintiff-States.  The American Cancer Society Cancer Action Network filed as amicus, urging the court to uphold the ACA and to “recognize Congress’s clear intent to improve access to lifesaving health care for millions of Americans.”  A bipartisan group of law professors filed as amicus, arguing that “[t]he arguments of both the plaintiff States and the United States on the severability of the insurance mandate from the other provisions of the ACA are inconsistent with settled law.”  On July 19, 2018, Senate Democrats introduced a Senate resolution that would authorize Senate Legal Counsel to intervene in Texas v. US to defend the ACA’s patient protections for people with pre-existing conditions.

The second suit, City of Columbus v. Trump, filed on August 2, 2018 by the Cities of Baltimore, Chicago, Columbus, and Cincinnati in the U.S. District Court for the District of Maryland alleges that the Trump Administration’s actions over the last several years amount to an unconstitutional sabotage of the law the President is required to faithfully execute.  The suit makes two claims: the first claim that the Administration is acting arbitrarily and capriciously, and the second that President Trump is violating the “Take Care” Clause of the Constitution.  Under the Take Care Clause of the U.S. Constitution, the President and his or her Administration must “take care that the laws be faithfully executed.” U.S. Const. art. II, § 3.  The suit cites a range of administrative actions taken to sabotage the ACA and have the aim and effect of weakening ACA exchanges, driving up premiums, and driving out issuers, ultimately increasing the rate of the uninsured and underinsured.

Judge O’Connor, after first announcing that oral arguments in Texas v. US would take place on Monday, September 10, moved up oral arguments to Wednesday, September 5, at 9:30 a.m.  At the same time in Washington, D.C., Supreme Court nominee Brett Kavanaugh will be testifying before the Senate Judiciary Committee for potential confirmation.  As some have noted, the fate of the ACA could turn on Kavanaugh’s appointment to the Supreme Court.  Kavanaugh’s preeminent views on separation of powers and his textualist-meets-originalist approach to statutory interpretation is consistent and can be expected to appear in his opinions, but is alarming to health care advocates and patients.  Kavanaugh’s jurisprudence shows that he cares deeply about administrative law and is unlikely to “deconstruct the administrative state,” but he is likely to “put a tighter leash on the regulatory state.”  In all, the fate of the ACA remains to be seen.

 

 

 

Change or No Change in Healthcare Fraud and Abuse Enforcement?

Practitioners are wondering whether the robust role of the federal government in healthcare fraud and abuse cases will remain the same. In Fiscal Year (FY) 2016, the federal government recovered over $3.3 billion as a result of health care fraud judgments, settlements and additional imposition in health care fraud cases and proceedings. Additionally, in June 2016, the Medicare Fraud Strike Force engaged in a nationwide healthcare fraud takedown that resulted in charges against about 300 individuals that include doctors, nurses and other licensed medical professionals. Rooting out fraud and abuse in healthcare has been a goal of every administration since President Ronald Reagan.

On October 27, 1986, President Reagan signed the False Claims Amendments Act of 1986, which soon became a successful anti-fraud law to deter and fight waste, fraud and abuse in the healthcare field. What makes the False Claims Act (FCA) an important tool to fight any malfeasance in the healthcare system is the qui tam provision that allows whistleblowers to expose fraud against federal government. In 2010, the Patient Protection and Affordable Care Act (ACA) amended portion of the FCA and some of those changes are considered by practitioners to have increased the number of healthcare-related FCA cases. It is undisputed that the FCA allows government to recover billions of dollars, however, the FCA defense bar is awaiting to see if there would be any change to the FCA related provision in ACA. During the confirmation hearing of Attorney General Jeff Sessions, when Senator Charles Grassley asked him to elaborate his intent regarding the FCA, Attorney General Sessions stated, “in the qui tam provisions and the part of that, I’m aware of those. I think they are valid and an effective method of rooting out fraud and abuse. I even filed one myself one time as a private lawyer….” At this point this testimony only serves as a mere reverence for FCA, which is not necessarily a clear indication what will be the effect of qui tam healthcare lawsuits or overall healthcare fraud and abuse enforcement during the Trump Administration.

There are two early signs that are leaning towards the continuity of a vigorous fraud and abuse enforcement. First, the budget that has been released by the Trump White House requested additional $70 million to fund for the Healthcare Fraud and Abuse Control program.  Trump’s proposed budget plan envisioned a whopping budget cut for the Department of Health and Human Service, but the additional request of fund for fraud prevention is likely an early sign of continuity of the robust fraud and abuse enforcement. Second, recently the Department of Justice has joined a whistleblower lawsuit, United States of America ex rel Benjamin Poehling v. Unitedhealth Group Inc., No. 16-08697 (Cent. Dist. Cal. Sep. 17, 2010), ECF No. 79, against UnitedHealth Group (United) and its subsidiary, UnitedHealthcare Medicare & Retirement—the nation’s largest provider of Medicare Advantage (MA) plans. This suit was originally filed in 2011 by a former United Healthcare finance director under FCA, and in accordance to FCA this case was sealed for five years while DOJ investigated the claims. The complaint alleged that United Health engaged in an upcoding scheme by falsifying about the severity of patients’ illness. This case is gaining some attention partly due to practitioners’ curiosity to gauge Attorney General Session’s approach to FCA cases. The New York Times has reported that DOJ’s court notice in this case was filed by a lawyer who joined the Civil Division as a part of Trump administration.

Perhaps it is too early to decipher the Trump Administration’s position on this particular matter.  Yet some early signs suggest the effect of FCA is not waning. In sum, ferreting out fraud and abuse has always enjoyed bipartisan support.  Moreover, the ACA made significant strides towards that bipartisan goal and allowed to recover a record amount of money to the government coffers, and those strengthened provisions of FCA as enacted in ACA will likely remain a tool for the government to maintain the integrity of the healthcare system.

D.C. District Court Limits Discounts to Orphan Drugs

On October 14, 2015, Judge Rudolph Contreras of the District Court for the District Court of Columbia sided with drugmakers in a decision that narrowed the scope of 340B, a popular but controversial drug discount program. The decision effectively bars children’s hospitals, cancer hospitals, and rural hospitals from obtaining 340B discounts for so-called “orphan” drugs like Prozac.

The plaintiffs in the case, Pharmaceutical Research and Manufacturers of America (“PhRMA”), is a lobbying group comprised of 48 of the nation’s pharmaceutical heavyweights, including Novartis and Pfizer. PhRMA challenged an HHS Interpretive Rule, which would have expanded the scope of the drug discount program. PhRMA argued that the agency’s Interpretive Rule contravenes the plain language of 340B. Judge Contreras agreed.

Background to 340B and the Disputed Interpretive Rule

At the heart of this dispute are high-demand “orphan” drugs like Prozac. Orphan drugs are drugs developed to treat a rare disease or condition; the rare disease or condition is the “orphan” use. But, by and large, orphan drugs are more well-known for their non-orphan uses. In the case of Prozac, the drug’s designated orphan use is autism and certain types of body dysmorphic disorders. Yet most patients and providers use Prozac as a treatment for depression.

When the Affordable Care Act was passed, Congress significantly expanded the types of covered entities that would be eligible for 340B program discounts. The ACA added children’s hospitals, freestanding cancer hospitals, critical access hospitals, rural referral centers, and sole community hospitals to the 340B drug pricing program. The newly covered entities, however, are excluded from certain types of 340B program discounts.

Under 340B(e), newly covered entities do not have access to discounts for a “drug designated . . . for a rare disease or condition.” Pharmaceutical companies and providers disagreed over the scope of 340B(e). Pharmaceutical companies argued for a broader interpretation and insisted that the provision refers to all types orphan drugs.

To clarify the confusion, HHS issued an interpretive rule on July 23, 2014. Under the Interpretive Rule, drugmakers must offer orphan drugs at a discount to newly-covered entities when the covered entity purchases the drug for a non-orphan use. In the Prozac example, that means a covered entity like a rural hospital could get a discount on Prozac when purchasing the drug for depression (a non-orphan use), but not for autism (the designated orphan use). Drugmakers that fail to comply and refuse to offer the discount price must provide a refund to the covered entity for the overcharge.

D.C. District Court Applies Chevron Test, Vacates HHS Ruling

The court vacated HHS’s Interpretive Ruling, finding that it failed the Chevron test. Under the first prong of the Chevron test, the question is whether Congress has directly spoken on the precise question at issue. If so, the agency must follow the intent of Congress as clearly expressed in the statute. If the congressional intent is unclear, the court proceeds to the second step of the Chevron analysis to determine whether the agency’s ruling is “based on a permissible construction of the statute.”

In this case, Judge Contreras concluded Congress’s intent was clearly expressed in 340B(e) and its related statutory provisions, and that the second part of the Chevron analysis was unnecessary.

The court held in favor of the pharmaceutical company and rejected HHS’s Interpretive Rule.

After concluding that the Interpretive Rule failed the first prong of the Chevron analysis, the Court vacated the Interpretive Rule as “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” In effect, the D.C. District Court’s decision signals a victory for pharmaceutical companies who now do not have to provide orphan drugs at a discount for newly-covered entities like children’s hospitals and rural hospitals.

Experts Foresee Legal Attacks on Other Parts of Drug Discount Program

HHS can still appeal. In the meantime, legal experts weighed in on Law360 and predicted that the decision could encourage drugmakers to lodge additional lawsuits on other parts of the 340B program. In particular, the pharmaceutical industry has railed against the “mega-guidance” that HHS released in August 2015 for the drug pricing program. The omnibus guidance is still in the note and comment process, with the current 60-day comment period ending on October 27, 2015.

Lawyers speculate that this decision leaves the omnibus guidance vulnerable to legal attack. Based on this decision, pharmaceutical companies can challenge the mega-guidance in court as soon as it is finalized, before HHS even attempts any type of enforcement. As Kristi Kung of Pillsbury Winthrop Shaw Pittman stated, “The court here found that the agency didn’t actually have to take an enforcement action against a manufacturer for there to be [a lawsuit].”

Reactions from Providers Underscore Deep Disappointment, Concern Over Access

The District Court decision struck a deep nerve among hospitals and providers. Immediately after the decision was released, the American Hospital Association (AHA) released a statement expressing its deep disappointment.

“This decision comes at a steep cost for the vulnerable patients cared for by rural and cancer hospitals,” AHA stated. “[The decision] will reduce access to critical services and treatments for some of the most vulnerable patients in society. Sadly, the biggest beneficiary of this ruling is the pharmaceutical industry – it does nothing to help either patients or taxpayers.”

The American Society of Health System-Pharmacists (ASPH) similarly stepped out in opposition of the decision. In its own statement, ASPH pointed out the adverse effects of the decision on access to care. According to ASPH, “this ruling will limit access to critical medications for the sickest patients in our healthcare system. . . . Without access to these discounts, participating hospitals may not be able to absorb the cost of providing care to patients who otherwise would not be able to afford it.”

In an interview with Modern Healthcare, the National Rural Health Association agreed, adding that the decision might cause rural hospitals to pass some orphan drug costs onto patients and could lead to some hospitals not stocking certain medications.

The overwhelming reaction against the decision is clear: the D.C. District Court decision creates public policy implications which cut off access to affordable care. By rejecting HHS’s orphan drug discount rule, this decision strongly disadvantages the same patients from underserved areas which the Affordable Care Act meant to assist.

How the NFIB v. Sebelius Ruling Will Increase the Amount of Uninsured under the ACA

In a March 2012 report, the Congressional Budget Office (CBO) estimated that by 2022, the Patient Protection and Affordable Care Act (ACA) would reduce the number of nonelderly people without health insurance by 33 million, leaving another 27 million still uninsured.  A significant part of that 33 million included the 17 million more people the CBO estimated to qualify for Medicaid by 2022 under the ACA.  They had not previously qualified because the ACA increased the eligible income to those making up to 138% of the Federal Poverty Level.  This increase in eligibility would have been implemented by making all federal Medicaid dollars given to the states contingent on states increasing the pool of eligible individuals.

On June 28th, the Supreme Court ruled in National Federation of Independent Business v. Sebelius, however, that the federal government could not withhold current levels of Medicaid funding to force the Medicaid expansion.  Instead, it could only withhold the additional funds it planned to give out, making the Medicaid expansion optional state-by-state.

Based on the Sebelius ruling, the CBO reworked its estimates in a July 2012 report that concluded, because of the Supreme Court ruling, six million fewer people would qualify for Medicaid than previously estimated. Of those six million, however, an additional three million would qualify for the new exchanges.  Therefore, the net loss of insured people thanks to the Supreme Court ruling was three million.  In updating their numbers, the CBO did not attempt to guess which states would or would not expand their Medicaid program, but attempted to “reflect an assessment of the probabilities of different outcomes…and are, in their judgment, in the middle of the distribution of possible outcomes.”

These figures are being discussed again because of a June 2013 study by HealthAffairs, which did attempt to guess state-by-state who would be expanding their Medicaid programs and its affect on the uninsured.  They note that, after the Supreme Court decision, 14 states had announced their intent to opt-out of the expansion, six were undecided, three were leaning against the expansion, and two were leaning toward the expansion.  They found that if all currently undecided states opted in, 29.8 million people would remain uninsured by 2016 (compared to 26 million people uninsured according to the CBO by the same year).  That number would rise to 31 million if all of the undecided states opted out.  They also note that around 80% of those uninsured would be US citizens, and no matter which way the undecided states go, 4.3 million children and 1 million veterans would likely remain uninsured.

As of a September 17, 2013 a report by the Advisory Board Company found that the number of undecided and not participating states had increased. They found 15 (up from 14) states firm in opting out of expansion, seven (three) leaning against expansion, five (six) undecided or exploring an alternative model, four (two) leaning towards expansion, and overall 20 (25) firmly participating.  Therefore, the percentage of states that could be opting out has increased from 34-46% to 44-54% of states.  This will in turn increase the number of uninsured people.  As the merits of the ACA continue to be debated on Capitol Hill in light of the budget debate, and more states become firm in their plans to opt-in or opt-out of the Medicaid expansion, the number of those who are ultimately uninsured could rise and continue to undermine the goal of universal health care.

 

Breast Pumps For All, But Not Necessarily The Best

The ACA requires insurance companies to provide new mothers with breast pumps and other equipment that is necessary to help them breast feed.

Unfortunately, the law doesn’t specify the type or quality of the breast pumps to be provided, so the companies (with doctors’ recommendations) get to decide. This issue leads to whether a company will provide a manual or an electric pump.

The benefits of an electric pump over a manual pump are several: they’re high-powered and can simulate a nursing child, while manual pumps can be weak, clumsy, and cumbersome for a working mother to use. They take more time to pump than an electrical pump.

The costs are also considerably different, when a high-end electric pump coming in at around $300, and a manual pump costing as little as $35.

Surprise Benefit of Obamacare: Less Spending

On March 7th, Kathleen Sebelius of Health and Human Services announced that there has been a slowdown in medical spending since the implementation of the Affordable Care Act.

Obamacare, Sebelius said, is due the credit for increased efficiency and slowed medical spending growth.

“The health care law’s push for coordinated care and paying for quality rather than quantity is putting downward pressure on medical costs, the article reports,” Sebelius wrote in a blog post. “It’s improving the way health care providers do business, and that’s good news for patients.”

Sebelius cited a USA Today study that found the ACA’s cost-control measures are working.