Hearing hits Obama Administration over Cost Sharing Reduction funding

The Obama Administration unlawfully funded the Cost Sharing Reduction (CSR) program under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a House Ways and Means Oversight Subcommittee hearing led by subcommittee chairman Peter Roskam (R-Ill). The hearing included witness testimony from agency officials regarding the propriety of the Administration’s spending on a program with disputed appropriations. The hearing was accompanied by the release of report containing the findings of a 17-month oversight investigation into the Administration’s funding of the CSR program.

Obstruction

Ways and Means Committee Chairman Kevin Brady (R-Texas) emphasized what he called an unprecedented level of obstruction by the Obama administration and described the hearing as an important step towards transparency. Representative John Lewis (D-Ga) expressed concern that the hearing was another partisan attempt to “roll back health care reform.” Lewis asserted that because the CSR funding issue was being decided through ongoing litigation in federal court, it was not the place of a congressional committee to litigate the issue. Chairman Brady contested assertions that the hearing was improper as a result of ongoing litigation, noting that the power of the purse is not limited by ongoing litigation between Congress and the Executive branch. Additionally, he noted that the dispute was not about health care but, instead, the separation of powers.

CSR

Mary Wakefield, Acting Deputy Secretary of HHS, explained that the CSR program was designed to defray the cost of health coverage for low-income individuals. She explained that it limits out-of-pocket costs for low-income individuals because, in many cases, out-of-pocket costs are the factor that prohibits access to care. She explained that, often, those costs serve as a barrier to care because low-income individuals are forced to choose between two essential expenditures—for example, housing and health care. She testified that 6.4 million people are benefitting from the CSR program as of 2016. Roskam objected to her characterization of the program, noting that the CSR subsidy is a subsidy for insurance companies and not “poor people.” Representative Joe Crowley (D-NY) called Roskam’s characterization unclear, explaining that the CSR program benefits patients “at the point of care.”

Appropriation

Roskam asserted that, by law, the CSR program requires an annual appropriation. However, he said, in the absence of a congressional appropriation, the administration decided to fund the CSR program with a permanent funding appropriation (31 U.S.C. §1324) that was designed to support the ACA’s premium tax credit. John Koskinen, Commissioner of the Internal Revenue Service, acknowledged that under the IRS’ charge to implement the tax provisions of the ACA, the IRS decided to use the Section 1324 appropriation for the CSR program. The agency officials asserted that the funding decision was appropriate, in part, because the CSR program is integrated with the other ACA subsidies like the premium tax credit. In response to requests for further legal justification for the funding source, all of the agency officers referred lawmakers to the briefs of the ongoing litigation between House Republicans and the Obama Administration (see Court sides with House Republicans, finds no appropriation for cost-sharing reductions, Health Reform WK-EDGE, May 18, 2016).

Subpoenas

In response to questions regarding obstruction and agency compliance with subpoenas, Mark Mazur, Assistant Secretary for Tax Policy at the Department of Treasury, Michael Deich, Senior Advisor for Budget at the Office of Management and Budget, and Wakefield testified that they have responded to subpoenas and will continue to work with Congress regarding requested documents.

Highlight on Misssissippi: Budget crisis has health pundits grumbling

Mississippi’s fiscal year (FY) 2017 state budget takes effect on July 1, 2016, and health care stakeholders are decrying budget decreases and the potential misuse of funds. Advocates and lawmakers are concerned about overall financial cuts, mental health experts want more program funding, and a health care trust fund is about to hit a zero balance in the state that ranks 48th in state public health funding compared to the rest of the United States and the District of Columbia.

Department of Health

The Mississippi State Department of Health is subject to budget cuts in FY 2017. Although a range of cuts have been mentioned, various news outlets report cuts amounting to $4 million.  They also indicate that the Department is suffering as a result, having been forced to lay off employees, leave other positions unfilled, and close clinics. Health Department funds are allocated to Health Services, including maternal and child health, oral health, and preventive health; Health Protection, including environmental health an licensure; Communicable Disease; Tobacco Control; Public Health Emergency Preparedness and Response; and Administration and Support Services. Charles “Buddy” Daughdrill, Executive Director of the Mississippi Public Health Association, published a scathing editorial criticizing the legislative cuts, noting that the budget allocates to the state Department of Corrections roughly nine times the amount of funds that the Health Department receives. He suggested that Mississippians “should be personally appalled” by the budget and contact state representatives, the Lieutenant Governor, and the Governor to express their views.

Department of Mental Health

The Mississippi Department of Mental Health is particularly concerned about more than $8 million in cuts.  The Mental Health department has eliminated 172 positions, although some employees were transferred to other positions within the agency, and cut forensic psychiatric beds, which allow psychiatrists to determine whether alleged criminals are mentally competent to stand trial.  Mental Health oversees various programs offering services to address mental illness (MI), intellectual and developmental disabilities (IDD), alcohol and drug addictions, and Alzheimer’s Disease and other dementia, including institutional and community programs and support services.

Health Care Trust Fund

The fate of the Mississippi Health Care Trust Fund is, perhaps, symbolic of the state’s budget woes. One of the first states to sue tobacco companies to collect funds required to treat ailing smokers, the state settled its lawsuit in 1997. In 1999, the legislature created the Fund.  Tobacco companies would pay money into the fund on an annual basis, where they would accrue interest; some of those funds would be directed for use by the Health Care Expendable Fund. Due to budget constraints, legislators sent funds for many years directly into the state budget.  Some funds were used on health care, while others were diverted to other programs. The state will receive roughly $116 million as part of its annual settlement payment in 2016, but the funds will be used in the budget.  The Fund will have a zero balance as of July 1, 2016.

Advocates view the overall cuts, which may appear relatively small, as unduly burdensome on a system that is already struggling to allocate funds to programs. As July first approaches, the possibility of changes to the budget diminish, but that hasn’t stopped advocates from raising their voices and demanding change.

Highlight on Montana: Medicaid copay increases kick in; providers worry about burden

Planned increases for Montana’s Medicaid copayments went into effect on June 1, 2016. The changes set forth a copayment amount for certain Medicaid members, with copayments not to exceed a combined limit of 5 percent of the family’s household income quarterly. Some are concerned that the increases could burden low-income patients.

Copayment increases

Under the changes, which were spurred by a provision in Montana’s Medicaid expansion plan, members will income above 100% of the federal poverty level (FPL) will be responsible for a 10 percent copayment of the provider’s reimbursed amount for any Medicaid-covered service. For members with income at or below 100 percent of the FPL will be responsible for a copay of $4 for preferred brand drugs and an $8 copay for non-preferred brand and specialty drugs; $3-$4 copay for dental, home health, licensed professional counselor, psychologist, licensed clinical social worker, and speech therapy services; $2-$4 copay for audiology, hearing aids, occupational therapy, optician/optometric, and physical therapy services; $1-$4 copay for public health clinic services; and $0-$4 copay for home dialysis attendant, personal assistance, independent lab and x-ray, mental health clinic, chemical dependency, and targeted case management services. Provider preventable healthcare acquired conditions, generic drugs, and approved preventive services no longer require a copayment. Providers may not deny services if the member is at or below 100 percent of the FPL and is unable to pay copayments. The member remains responsible for paying any copayments owed to the provider.

American Indians and Alaska Natives who are eligible for or have received a service from a Tribal health, Urban Indian clinic, or Indian Health Service provider; terminally ill members receiving hospice services; and members who are receiving services under the Medicaid breast and cervical cancer treatment category will no longer have copayments.

Burden to low-income members

Barb Mettler, executive director of the Mental Health Center in Billings, Montana, expressed concern that the increases will affect the poorest and most vulnerable Medicaid members, who may use Medicaid-covered services several times a week. “The way I see it is they have three options. They find an additional way to pay, they don’t pay, or they stop using the services,” Mettler said. Even with caps on the total copay, she worries that clients will choose not to seek the care they need.

The burden on patients translates to a burden on health care providers. Under the new changes, providers cannot and will not turn away people at or below 100 percent of the FPL who are unable to pay the copayments, requiring the facility to make up the costs. According to Mettler, the Mental Health Center had to make up a shortfall of about $500,000 of unpaid patient charges in 2015, after already having to factor charity care and bad debt into its budget.

House passes bill to raise some off-campus hospital outpatient department rates

Some off-campus hospital outpatient departments (HOPDs) could be grandfathered into receiving outpatient payment rates under a piece of legislation passed by the House. The legislation—known as “The Helping Hospitals Improve Patient Care Act” (HHIPCA) (H.R. 5273)—would provide an exception to new off-campus HOPD payment rules for off-campus facilities that were “mid-build” when the Bipartisan Budget Act of 2015 (BBA) (P.L.114-74) was enacted. According to the Congressional Budget Office (CBO), the legislation, which also seeks to modify other Medicare payment rules, would increase direct spending by $50 million over the 2017 to 2021 period and decrease direct spending by $14 million over the 2017 to 2026 period.

HOPDs

The BBA’s HOPD payment rules require that Medicare pay for services furnished in new off-campus facilities as though those they were performed in an office or ambulatory surgical center. The new legislation would exempt mid-build HOPDs—facilities that were under construction on November 2, 2015—from the BBA rule and allow them to continue to receive outpatient rates at those facilities (see Lawmakers lend hospitals helping hand to improve patient care, Health Law Daily, May 19, 2016). The CBO estimates that the payment exception for mid-build HOPDs would be the most costly part of the legislation, increasing net Medicare spending by $750 million over the 2017-2026 period. The bill would also cut direct spending by $750 million over that same period by reducing the inpatient prospective payment system (IPPS) payment rate by 0.04 percent in fiscal year (FY) 2018.

Cancer hospitals

The legislation would also provide an exemption to the HOPD payment rules for cancer hospitals. Under the proposed law, cancer hospitals at new off-campus locations would continue to be paid at cancer hospital rates. The law would implement an attestation requirement for cancer hospitals seeking the higher payment rates and give HHS $2 million to audit those attestations. Overall, the CBO estimates, the cancer hospital provisions of the HHIPCA would increase direct spending by $20 million over the 2017 to 2021 period but have no net budgetary effect over the 2017 to 2026.

EHRs

The law would also exempt eligible professionals based in ambulatory surgical centers (ASCs) from punishment under the electronic health record (EHR) meaningful use program. The exemption from compliance with EHR standards would apply to payments made in calendar years 2017 and 2018 and continue with the Merit-Based Incentive Payment System (MIPS) beginning in 2019. The CBO estimates that the exemption would exempt approximately 2000 ASC-based professionals from penalties related to EHR use—penalties that the CBO expects to average about $3000 per professional. The CBO estimates that the EHR provision would increase direct spending by $17 million over the 2017 to 2026 period.