A Smattering of Obamacare Updates - Cadillac Tax, Shrinking Exchanges & Taxpayer Funded Dance Crews

(1) I promised this years ago on the Armstrong and Getty Show ... In an ironic post-election development, a key piece of the original funding mechanism of the ACA could finally be dispensed.

(2) Your tax dollars at work: CA's Obamacare Exchange is paying break dancers to tour across the state and promote government funded healthcare. "Covered California wouldn’t say how much it is spending on the bus tour and the dancers, despite multiple requests over more than a week. The agency is funded by fees, equal to 3.75 percent of premiums, that it levies on its health plans. Last year, the agency spent about $100,000 for more than a dozen murals in communities across the state." 

(3) Obamacare continues to shrink, dramatically. The number of people who got covered each day was down 21%. Here’s what’s happened to HealthCare.gov first-week daily activity averages:

• Applicants seeking plans: 124,892 (down 18%).
• Applicants renewing coverage: 94,131 (down 19%).
• Applicants applying for new coverage: 29,761 (down 13%).
• Number of consumers covered by applicants’ applications: (267,356 (down 21%).

  

California's Medicaid Program Paid Over $4 Billion in Illegitimate Payments Over 4 Years According to a State Audit

From Kaiser Health News:

California’s Medicaid program made at least $4 billion in questionable payments to health insurers and medical providers over a four-year period because as many as 453,000 people were ineligible for the public benefits, according to a state audit released Tuesday. 

In one case, the state paid a managed-care plan $383,635 to care for a person in Los Angeles County who had been dead for more than four years, according to California State Auditor Elaine Howle.  

She said she found “pervasive discrepancies” in Medicaid enrollment in which state and county records didn’t match up from 2014 to 2017, leading to other errors that persisted for years. The bulk of the questionable payments, or $3 billion, went to health plans that contract with the state to care for 80 percent of enrollees in California’s Medicaid program, known as Medi-Cal. 

The program for low-income residents is the nation’s largest and funded by both the federal and state governments. The state findings echo similar problems cited by federal officials and come at a time when the Trump administration has applied extra scrutiny to California’s spending on Medicaid. 

In the report, the state auditor said it’s critical for the state to have accurate information on eligibility “because it pays managed care plans a monthly premium for an increasing number of Medi-Cal beneficiaries regardless of whether beneficiaries receive services.” 

California’s Medicaid program has 13.2 million enrollees, covering about 1 in 3 residents. It has an annual budget of $107 billion, counting federal and state funds. Nearly 11 million of those enrollees are in managed care plans, in which insurers are paid a monthly fee per enrollee to coordinate care. 

The state’s Medicaid enrollment soared by more than 50 percent since 2013 due to the rollout of the Affordable Care Act and the expansion of Medicaid. 

Enrollment grew from 8.6 million in December 2013 to more than 13 million in December 2017, according to the audit report. 

In the case of the dead patient, a family member had notified the county of the enrollee’s death in April 2014. However, the person’s name remained active in the state system, and California officials assigned the patient to a managed-care plan in November of that year. 

From then on, the state kept making monthly payments of about $8,300 to the health plan until August 2018, shortly after the auditor alerted officials of the error. Auditors didn’t identify the health plan. 

There also were costly mistakes in cases in which Medi-Cal pays doctors and hospitals directly for patient care – a program known as “fee for service.” 

For instance, the state auditor found that Medi-Cal paid roughly $1 million in claims for a female patient in Los Angeles County from June 2016 to December 2017 even though the county office had determined in 2016 that she was ineligible. 

In a written response to the auditor, the California Department of Health Care Services said it agreed with the findings and vowed to implement the auditor’s recommendations. However, the agency warned it may not meet the auditor’s timeline, which called for the main problems to be addressed by June 2019. 

In a statement to California Healthline, the agency said it is implementing a quality control process and “where appropriate, DHCS will recover erroneous payments.” 

Early on in 2014, as the ACA rolled out, the state struggled to clear a massive backlog of Medi-Cal applications, which reached about 900,000 at one point. There were widespread computer glitches and consumer complaints amid the increased workload at the county and state level. 

In addition to questionable payments for care of ineligible enrollees, Howle and her audit team also discovered some patients who may have been denied benefits improperly. The state auditor identified more than 54,000 people who were deemed eligible by county officials but were not enrolled at the state level. As a result, those people may have had trouble getting medical care. 

In February, a federal watchdog estimated that California had signed up 450,000 people under Medicaid expansion who may not have been eligible for coverage.
The inspector general at the U.S. Department of Health and Human Services said California made $1.15 billion in questionable payments during the six-month period it reviewed, from Oct. 1, 2014, to March 31, 2015. 

In August, Seema Verma, administrator of the U.S. Centers for Medicare and Medicaid Services, told a U.S. Senate committee that she was closely tracking California to ensure the state “returns a significant amount of funding owed to the federal government related to the state’s Medicaid expansion.” 

Verma expressed concern that states had overpaid managed-care plans during the initial years of Medicaid expansion, resulting in “significant profits for insurance companies.” By year’s end, she said she expects the federal government to recoup about $9.5 billion from California’s Medicaid program, covering overpayments from 2014 to 2016. 

Tony Cava, a spokesman for Medi-Cal, said the state has already returned about $6.9 billion to the federal government and expects more than $2 billion more to be sent back by December.

Full story here. 

Healthcare Measure Routed in Palo Alto

Voters strike down Measure F, which would have required City Hall to regulate hospital bills. Similar measure defeated in Livermore.

From Palo Alto Online:

A proposal by a union of health care workers to impose caps on how much Palo Alto's medical providers can charge patients and insurance companies was emphatically rejected by local voters on Election Day on Tuesday. 

The proposal, known as Measure F, would have placed City Hall in charge of regulating the health care costs of most local medical providers to ensure that none are charging their patients more than 115 percent of the cost of "direct patient care," which excludes administrative salaries. The Service Employees International Union-United Health Workers (SEIU-UHW) had argued that the measure is necessary to curb Stanford's exorbitant costs and ensure that Stanford devotes more resources to reducing its high rate of hospital-contracted diseases. 

With 93 percent of the results counted, the measure was trailing by a huge margin, with 77.03 percent of the voters opposing it and 22.97 percent supporting it. Of all the votes cast, 10,702 went against Measure F while 3,192 went for it. ... 

 

Palo Alto & Livermore, Calif. Attempt Price Controls on Hospitals in Upcoming Election - Unprecedented at Local Level

In Brief: 

• The the best of our knowledge, local governments have never attempted to regulate hospital prices.   
• Measures would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.” 
• What costs are acceptable and how will we stop providers from increasing costs as much as possible” to compensate for the cap are not clear. 
• Stanford estimates this would cut its total revenue by 25%.   
• Industry competition is much healthier in Southern California than in the North - where hospital charges are typically 55% to 70% higher.   
• Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California.  

From Kaiser Health News:  

At a time of mounting national anger about rising health care prices, the country’s largest union of health workers has sponsored ballot measures in two San Francisco Bay Area cities that would limit how much hospitals and doctors can charge for patient care.

The twin measures in Palo Alto and Livermore, sponsored by the Service Employees International Union-United Healthcare Workers West, take aim primarily at Stanford Health Care, which operates Stanford Hospital and Clinics, the facility with the third-highest profits in the country from patient care services, according to a 2016 study.

The union also is sponsoring Proposition 8, a statewide measure that would impose a cap on profits for dialysis clinics. Together, the state and local measures seek to draw on public outrage over sky-high medical prices. And, for municipalities, they amount to a novel and untested effort to rein in those prices through the ballot box.

“I’ve been in this field almost 50 years, and I’ve never seen a local government regulating hospital prices,” said Paul Ginsburg, director of public policy at the Schaeffer Center for Health Policy & Economics at the University of Southern California. A number of states set hospital rates in the 1970s, and two states, Maryland and West Virginia, do so today, he said. ... 

The Palo Alto and Livermore initiatives, which also affect other medical systems in the cities, would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.”

And there, some experts say, lies the rub.

“What is a seemingly simple idea — limiting prices to 115 percent of ‘costs’ — is neither simple in execution, nor concept,” said Benedic Ippolito, a research fellow at the American Enterprise Institute who studies health care financing. “What costs are acceptable? How will we stop providers from increasing costs as much as possible” to compensate for the cap? ...

Under the initiatives, hospitals and other medical providers would be obliged to pay back any charges above the cap each year to private commercial — but not government — insurers, and to patients who pay for their own care. They would also owe the cities a fine equal to 5 percent of the excess charges. Fines collected by the cities could be used to pay for enforcing the laws.

Stanford estimates that Proposition F, the Palo Alto measure, would reduce the health system’s budget by 25 percent, forcing it to make cutbacks and possibly end essential services, said David Entwistle, the health system’s president and chief executive officer.

Livermore would need to spend $1.9 million a year on the staff required to implement Measure U — its version of the proposal — and would likely incur another $750,000 to $1 million in legal and startup costs, according to an analysis conducted for the city by Henry Zaretsky, a health economist who has worked for the state and the California Hospital Association. ...

Industry consolidation is far more pronounced in Northern California than in Southern California, according to a recent study from the University of California-Berkeley. As a result, inpatient hospital prices in the north were 70 percent higher and outpatient costs as much as 55 percent higher than in the south. The price disparities, even within the Northern California region, can be dramatic.

For instance, independent doctors in the Bay Area are reimbursed, on average, a median $2,408.45 for a routine vaginal delivery, which includes prenatal and postnatal visits, according to a 2017 Kaiser Health News analysis of claims data from Amino, a health cost transparency company. That compares with $5,238.13 for the same bundle of services for Stanford physicians (and $8,049.84 for doctors employed by the University of California-San Francisco).

The higher cost of medical care also pushes up insurance premiums for patients. Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California, the 2018 UC Berkeley study showed.

Read full article here.

Don't Expect a PPACA Ruling Before Election Day on the Repeal Effort in Federal Court

From HealthLeaders Media: 

An injunction against the Affordable Care Act would create chaos for the statute's Marketplace plans, which begin enrollment on November 1. If such a ruling were handed down before the midterms, it would be a welcome gift for Democrats.

Key Takeaways

• Republican attorneys general from 20 states want a federal judge to impose an injunction on the ACA.

• A ruling is unlikely before next week's mid-terms.

• The severability of the ACA's so-called individual mandate is a key issue in the suit.

• The Court is ultimately expected to hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban.  

It's been nearly two months since a U.S. District Judge in Fort Worth, Texas, heard oral arguments in Texas v. Azar challenging the constitutionality of the Affordable Care Act.

But court watchers hoping for a ruling soon probably shouldn’t expect anything from Judge Reed O'Connor until after the midterm elections next week, says Timothy S. Jost, professor emeritus at Washington and Lee University School of Law, and coauthor of the casebook Health Law.
"I'm sure Judge O'Connor is going to wait until after the election to rule," Jost says. "He's keeping his ear to the political news." ...

Jost says a ruling in favor of Texas Attorney General Ken Paxton and Republican officials from 19 other states who want to slap an injunction on the ACA would provide a pre-election gift to Democrats, as well as create upheaval for Marketplace plans, which begin open enrollment on November 1.

That was not lost on Department of Justice attorneys, who during oral arguments last month urged O'Connor to delay any injunction until 2019 to avoid "chaos."

The Republican attorneys general argued that the ACA became unconstitutional when Congress zeroed-out the tax penalty for the individual mandate, thus invalidating the sweeping legislation in its entirety.
A secondary argument by the plaintiffs focuses on the language in the 2010 statute, which says that the individual mandate is essential to creating a market in which guaranteed issued and preexisting condition exclusion bans are possible.

"The real question is what did the 2017 Congress intend to do when they zeroed out the tax?" Jost says. "Did they intend to get rid of the preexisting condition exclusions or not? You ask anyone in the Senate right now whether they think preexisting conditions should be excluded or not, they'll say, 'Oh no that's not what we did!'"

"So, the important question is when Congress repealed the tax in 2017 did they mean to get rid of the rest of the ACA?" Jost says. "Obviously they didn’t. They tried to amend parts of it in 2017 and they failed. To argue otherwise is just ridiculous."
 
Plaintiffs win likely 

"When O'Connor does rule," Jost says, "he will probably hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban."

"He might also throw out all of Title I, the exchanges, premium tax credits, and the premium stabilization programs, maybe even insurance reforms such as the age rating," Jost says.

"It's very unlikely he is going to throw out the Medicare donut hole closing, and the generic biologics provisions and the reforms to the Indian Health Service and all the other things that are inconceivably, not related to the individual mandate," Jost says. ...

Full story here.