To learn what's at stake in the case, see the following article by Jose Martinez, The Affordable Care Act: What's the Basis of the Supreme Court Case?

For commentary on the arguments regarding the constitutionality of the individual mandate, see David G. Savage and Noam N. Levey's article, Supreme Court Greets Healthcare Mandate with Skepticism .

For different views on how the Court received arguments concerning the constitutionality of the Medicaid expansion, see
- NHeLP Press Release, Supreme Court Concludes Oral Arguments on Health Reform, Justices Cast Doubt on Claims that Medicaid Expansion is Coercive.
- David G. Savage and Noam N. Levey's article, Justices Suggest Medicaid Expansion is Unconstitutional.

Today the Supreme Court begins to hear arguments about the constitutionality of the Affordable Care Act, and the arguments will occur over three days. The Court will consider four key questions:

(1) Whether the individual mandate is constitutional;
(2) If it is found unconstitutional, whether the entire Act must be struck down with the mandate, or only the provisions that seem linked to the mandate (such as the guarantee issue and ban on preexisting condition limits);
(3) Whether the Court should even hear this challenge now, or must wait until after the mandate actually goes into effect in 2014 and leads to some concrete financial harm (like someone being forced to purchase insurance or paying a fine); and
(4) Whether the Medicaid expansion to all adults who meet the income eligibiity limits is valid.

For a nice overview of the issues and timeline of the arguments this week, you should read A Guide to the Supreme Court Challenges to Obama's Health Care Law in the New York Times. For a more in-depth discussion of the legal issues presented, you can also check out my previous blog posts:

Continue reading "Supreme Court Hears Health Reform Arguments This Week" »

Last week, the U.S. Supreme Court issued an odd decision in the case of Douglas v. Independent Living Center. Douglas is the consolidation of three suits challenging cuts in California's Medicaid (Medi-Cal) reimbursement for a wide range of health care services. The Ninth Circuit affirmed lower court decisions halting the cuts because they were found to violate a provision of the Medicaid Act that requires rates be sufficient to ensure equal access to quality care. This provision, 42 USC 1396a(a)(30(A), is commonly known as the "Equal Access" or "30A" Requirement. The Supreme Court did not take up the issue of whether the cuts actually violated this requirement.

The Court only granted cert to decide whether patients and providers had a right to challenge such cuts in federal court using the Supremacy Clause, a Constitutional provision that essentially says federal law preempts conflicting state law. The problem is that the Court never answers this question. In a five-to-four decision, the Court reframed the question and remanded it back to the Ninth Circuit for briefing by the parties because during litigation the rates were approved by CMS (Centers for Medicare and Medicaid Services), the agency charged with administering Medicaid. The revised question is whether private citizens can use the Supremacy Clause to challenge state cuts after CMS has approved them.

As Professor Tim Jost has already commented, the practical effect of delaying the decision is a win for plaintiffs because it preserves their right to sue, for now. The majority declined to follow the dissent's approach, which would have held that the Supremacy Clause cannot be used regardless of CMS approval. Despite this apparent win for plaintiffs, some view the majority's opinion as foreshadowing a more favorable rule for states. According to KPCC news, for example, Governor Brown characterized the decision as giving states leeway in rate-setting and said the court gave the Ninth Circuit "clear instructions that are very favorable to the state's position." And in Professor Kevin Outterson's recent blog, he predicts that on remand the Ninth Circuit will defer to CMS and find no violation of the Supremacy Clause - he says "it won't even be a close decision."

While I agree that language in the majority's opinion provides some evidence of a more favorable approach for states, I disagree that the Douglas decision clearly favors the states or demands unqualified deference to CMS in the future. Rather than clarifying questions about future payment challenges, Douglas raises a new and more challenging question about the level of review required and how courts decide when deference to federal approval is warranted. In fact, three recent decisions from a California district court highlight this question, and are probably a better predictor of what the Ninth Circuit will do on remand. In each case, the court temporarily enjoined Medi-Cal cuts despite CMS approval. Far from resulting in a slam dunk win for states, the court refused to defer to CMS's approval because of serious defects in the state's rate-setting process that made it look arbitrary and capricious, and because CMS's own inconsistency and approval of such a defective process did not warrant the kind of deference typically required for agency action.

Continue reading "The (In)Decision of Douglas v. ILC: The Relevance of CMS Approval in Challenges to Medicaid Payment Cuts" »

In the last few months, a California district court has issued temporary injunctions to prevent Medi-Cal state cuts challenged in three separate lawsuits: California Hospital Association v. Douglas; California Medical Association v. Douglas; and Managed Pharmacy Care v. Sebelius. The cuts were part of Assembly Bill 97 ("AB 97"), which enacted significant payment reductions for many kinds of services, including skilled nursing, physician, clinic, dental, emergency medical transportation, durable medical equipment and supply, and pharmaceutical services. Lawmakers are using AB 97 to try to solve California's fiscal crisis, but providers and beneficiaries are fighting the cuts. They claim that cuts to provider reimbursement will exacerbate existing barriers to health care for Medi-Cal beneficiaries who already have trouble finding providers willing to serve them, and that the state's rate-setting process violates federal law.

Previously I have blogged about this problem and about the lawsuits brought by Medi-Cal providers and beneficiaries to prevent these kinds of cuts from going into effect. States must comply with procedural and substantive guarantees found at 42 U.S.C. Section 1396a(a)(30)(A), commonly referred to as the "Equal Access Provision" or "30A" requirement. Under this provision, states must "assure that provider payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available to the general population in the geographic area." State officials cannot honestly and reasonably make such assurances without undertaking some kind of analysis to assess the impact that rates will likely have on access, and federal courts have consistently held that states cannot cut provider rates solely in response to fiscal concerns. Yet this is precisely what California lawmakers have tried to do a number of times before, until federal courts were asked to intervene and prevented the cuts.

Federal regulators are supposed to oversee the state rate-setting process to ensure 30A compliance. CMS (the Centers for Medicare and Medicaid Services), is the division of the U.S. Department of Health and Human Services that administers Medicaid, and the Medicaid Act requires states to submit proposals to change rates to CMS for approval. Until recently, however, federal regulators have been largely absent in this arena: HHS has failed to promulgate regulations providing guidance to states about how to comply with 30A, though the Obama administration has recently proposed such rules; and HHS has failed to use its enforcement power to reject rate cuts, even where state violations of federal law have been clear and egregious. It is because of this regulatory void that federal courts historically have played such a critical role in Medicaid payment suits.

Significance of the AB 97 Rate Cut Cases

The most recent decisions by a California district court enjoining the AB 97 rate cuts are noteworthy for a couple of reasons. First, both federal regulators and state officials seemed to take their 30A obligations seriously. When California submitted its rate cuts for approval, CMS did not simply rubber stamp them, it requested additional information concerning the implications of the cuts on health care access. California performed an access review, ultimately concluding that the cuts would not adversely impact quality or access. Based on this, CMS approved the cuts.

These cases are also important because of the current threat to providers' and beneficiaries' right to challenge illegal rate cuts in federal court. As I describe in greater detail in a prior blog, the Supreme Court will be deciding this issue soon, and HHS has sided with the states in advocating for the elimination of this judicial last resort. HHS's argument against allowing suits to challenge payment cuts is based, in part, on the fact that HHS has been explicitly charged with Medicaid oversight in rate-setting. Implicitly, HHS seems to be claiming that it can be trusted to exercise its oversight effectively. Certainly, the Obama administration has done more than past administrations to try to earn this trust by stepping up its oversight activity with respect to access and proposing rules to give states guidance for complying with 30A.

There are still many unanswered questions about HHS's stated commitment to enforcing 30A obligations, and these recent cases provide a troubling glimpse of this "commitment" in practice. In all three cases, the court's opinion reveals fundamental flaws in the state's rate-setting process -- flaws that reflect a continuing disregard of federal law, and specifically access and quality protections. In approving these latest cuts, CMS seems to ignore these flaws, California's history of violating federal law, and even California's disregard of CMS's own suggested criteria for determining 30A compliance. Far from instilling trust in CMS's regulatory promises, these most recent cases reinforce the critical role that federal courts will need to continue to play in protecting Medicaid access in the future.

Continue reading "HHS Touts its Commitment to Medicaid Access, But Latest Payment Suits Raise Doubts" »

Yesterday the Supreme Court agreed to hear challenges to the Patient Protection and Affordable Care Act, the landmark health reform legislation signed into law by President Obama last year. The Supreme Court will consider several questions related to the constitutionality of the Act.

The first issue, and the one that has received the most attention so far, is whether the individual mandate is a constitutional exercise of Congress' power to regulate interstate commerce or to tax and spend for the general welfare. When the mandate goes into effect in 2014, it will require individuals to purchase insurance, unless they qualify for an exemption. This mandate raises a novel and important question about the scope of the government's power to require individuals to purchase a service from a private entity. So far two appellate courts (the Sixth and DC Circuits) have upheld the mandate based on Congress' power to regulate commerce, while the Eleventh Circuit held the mandate unconstitutional. For more on the constitutionality of the individual mandate, click here.

Continue reading "Supreme Court Will Hear Challenge to Health Reform" »

The DC Circuit is the latest appellate court to uphold the constitutionality of the individual mandate in the Affordable Care Act. Click here to read the decision.

An article titled "More Young Adults Insured Since Health Law Took Effect," appeared in the New York Times on Thursday, September 22, 2011. The article describes three surveys which show that an increasing number of adults under 26 are becoming insured through private insurance, despite the fact that the recession has left young adults unemployed at nearly double the rate of older Americans. Although the cause of the increase has not been proven, some attribute it to the new health reform law (the Affordable Care Act), which contains a provision allowing parents to cover dependents up to age 26. To read the article, click here.

So far two circuit courts have weighed in on the constitutionality of the individual mandate in the Affordable Care Act: the Sixth Circuit, which found the mandate constitutional, and the Eleventh Circuit, which found it unconstitutional. The Fourth Circuit had an opportunity to weigh in as well - it recently heard appeals from two Virginia district courts that reflected the same divide: Virginia v. Sebelius, which found the mandate unconstitutional, and Liberty University v. Geithner, which upheld the mandate. I describe both district court opinions in greater detail in a prior post.

Probably to most people's surprise, the Fourth Circuit dismissed both cases based on a lack of jurisdiction, and therefore did not reach the merits of the constitutional challenge. Practically, this will not impact whether the challenge is ultimately heard by the U.S. Supreme Court in light of the split between the Sixth and Eleventh Circuits. The court's reasoning for dismissal in the Liberty case is potentially significant, however, because it is the first time that a court has embraced the federal government's characterization of the mandate penalty as a "tax." This characterization has two important implications.

Continue reading "Fourth Circuit Dismisses Health Reform Challenges, But is the First Court to Adopt HHS's View of the Mandate as a "Tax"" »

Michael Campbell, the Visiting Reuschlein Clinical Professor at Villanova University School of Law, and former Executive Director of the Pennsylvania Health Law Project, has recently published a paper titled "Did I Do That? An Argument for Requiring Pennsylvania to Evaluate the Racial Impact of Medicaid Policy Decisions Prior to Implementation," in the Temple Law Review. Professor Campbell looks at the Medicaid program in Pennsylvania to examine how state funding decisions can have a disproportionately harmful impact on African Americans and Hispanics, while other policies seem to disproportionately benefit white populations.

Continue reading "Why Racial Impact Statements Should be Required for Medicaid Policy Decisions" »

Recently, the Eleventh Circuit U.S. Court of Appeals, in Florida v. HHS, partially affirmed a lower court decision which found the individual mandate of the Affordable Care Act unconstitutional. Earlier this year, the Sixth Circuit in Thomas More Law Center v. Obama, came to the opposite conclusion, upholding the mandate. So far every federal court addressing the merits of this challenge rejects the government's claim that the mandate (with resulting penalty) is an exercise of its very broad taxing power. Rather the issue turns on whether the mandate is a constitutional exercise of Congress' power to regulate interstate commerce. Although the power to regulate interstate commerce has also been interpreted very broadly by the Supreme Court, using this power to mandate the purchase of insurance is unprecedented and presents an important legal question about the scope of the interstate commerce clause. This creates a circuit split on a politically and legally divisive issue that will ultimately be decided by the U.S. Supreme Court.

Despite striking down the mandate, the Eleventh Circuit rejected the part of the lower court's holding that would have invalidated the entire health reform law. The Eleventh Circuit's holding is consistent with the District Court's ruling in Virginia v. Sebelius discussed in greater detail at my prior blog post Will the battle over the individual mandate threaten the entire health reform law? Both courts emphasized the presumption in favor of severability: "Generally speaking, when confronting a constitutional flaw in a statute, we try to limit the solution to the problem, severing any 'problematic portions while leaving the remainder intact." Given the lack of clear legislative intent regarding severability, and the fact that many provisions in the law were not directly tied to the mandate or even related to private insurance regulation, the Eleventh Circuit held that the mandate should be severed from the rest of the law.

Click here for a chart of key decisions about the constitutionality of the individual mandate with links to the cases. Go to Health Care Justice Blog for more information on each of the cases and links to the decisions.