HealthCare Roundtable e-News – May 5, 2017

House Republicans Pass Bill to Overhaul ACA

Congressional Republicans on May 4 narrowly passed legislation that would make major changes to the Patient Protection and Affordable Care Act (ACA).

The “American Health Care Act” (H.R. 1628) passed the House 217-213. All 193 Democrats voted against the bill, as did 20 Republicans.

After the vote, Speaker of the House Paul Ryan, R-Wisc., said at a White House press conference that the bill is needed because of what he described as dwindling choices and increased costs for consumers in the individual market who now buy policies in the state-level exchanges created by the ACA.

“The truth is, this law has failed, and it is collapsing,” Ryan said. “Premiums are skyrocketing and choices are disappearing. And it is only getting worse, spiraling out of control. And that is why we have to repeal this law and put in place a real, vibrant marketplace with competition and lower premiums for families. That’s what the American Health Care Act is all about. It makes health care more affordable, it takes care of our most vulnerable, and it shifts power from Washington back to the states and, most importantly, back to you, the patient.”

The original version of the American Health Care Act was to be voted on in March, but Ryan pulled the legislation amid opposition from both moderates, who were concerned about Congressional Budget Office (CBO) projections that the proposal would increase the number of people without insurance by 24 million within a decade, and conservatives, who said the bill did not make enough changes to the ACA and disparaged it as “Obamacare Lite.”

Several weeks of intraparty negotiations followed that, in the end, swayed most conservatives and just enough moderates to get a majority. The bill passed by the House would, among other things:

  • Reduce Medicaid spending by $880 billion over 10 years by phasing out the ACA’s expansion of the program and moving it toward a block grant funding model
  • Allow states to opt out of ACA requirements establishing “essential health benefits,” provided they had created “high-risk” pools
  • Maintain the prohibition on coverage denials based on preexisting conditions, but allow states to permit insurers to charge higher premiums based on a person’s health status, if that person has a break in coverage
  • Repeal the ACA’s employer mandate and individual mandate, but allow insurers to assess a 30 percent surcharge on premiums if a person has a break in coverage
  • Allow insurers to charge older people as much as five times the amount paid by younger beneficiaries; the ACA limits the ratio to 3:1
  • Replace the ACA’s income-based tax credits for the purchase of insurance in the exchanges with ones primarily based on age
  • Provide $123 billion over 10 years for states to use to help people acquire insurance
  • Cut taxes by $883 billion over 10 years

Democrats heavily criticized the legislation, saying it would increase the number of Americans who do not have health insurance, gut protections for people with preexisting conditions, increase costs, and reduce the amount of taxes paid by the wealthy. And they indicated that they are already looking for the bill to have an impact on the 2018 congressional elections.

“As special as we think we are when we come to the floor here, most Americans don’t know who their member of Congress is,” House Minority Leader Nancy Pelosi said. “But they will now, when they find out that you voted to take away their health care. They will know when you put an age tax on them or undermine Medicare, Medicaid and the rest.”

The CBO has not yet “scored” the revised bill, which will project its effects on the budget and insurance coverage levels.

The legislation now goes to the Senate, where it will likely serve as little more than a starting point. Republicans have only a two-vote majority in that chamber, and several GOP senators have already gone on record as being opposed to the House bill. In addition, the original plan was to structure the bill in such a way that it could be passed using the budget reconciliation process, which is limited to tax and spending-related measures. This procedure does not allow for filibusters and, thus, would require only a simple majority of votes to get through the 100-member Senate, rather than a 60-vote supermajority that would otherwise be needed. However, adding other provisions, such as those related to essential health benefits, could mean that the bill will be deemed not to be in compliance with budget reconciliation rules – a decision to be made by the nonpartisan Senate parliamentarian – which would make a Democratic filibuster possible.

Some Republican senators have indicated that, while they want to pass a health care bill, their effort may have little to do with the House legislation.

Sen. Lindsey Graham, R-S.C., derided the process used by his House colleagues, stating on Twitter on May 4 that, “A bill  finalized yesterday, has not been scored, amendments not allowed, and 3 hours final debate  should be viewed with caution.” And Sen. Roy Blunt, R-Mo., a member of the Senate leadership team, said, “I think there will be essentially a Senate bill.”

“In all likelihood, you have to go back to the House and say, ‘Here’s what you think, here’s what we think. Let’s be sure we get people more access. Let’s be sure we solve the problems of ObamaCare,'” Blunt said.

A Senate bill would have to go back to the House for another vote, and the changes made by the upper chamber could upset the delicate balance that was crafted to get the bill through the House the first time.

“If they revise it, there’s no way,” said Rep. Dave Brat, R-Va., a member of the conservative House Freedom Caucus, according to The Washington Post. “Have you been watching for the last few months how tight this is, and you’re going to shift this one or the other? Good luck. You don’t have to be Einstein to game theory that one.”

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DOJ Files Complaint Accusing UnitedHealth of Medicare Fraud

The U.S. Department of Justice (DOJ) on May 1 formally filed a complaint accusing UnitedHealth Group of defrauding the Medicare Advantage program.

Medicare Advantage offers managed care plans through private companies, which receive a fixed amount of money from the federal government per beneficiary each month. About 18 million people – roughly one-third of all Medicare beneficiaries – are in Medicare Advantage. Payments for a given beneficiary are based on an individualized “risk score” and are higher for patients who are identified as being sicker and, thus, more demanding of health care services. Audits have found that, in some cases, insurers appear to have exaggerated the ailments of their beneficiaries, overbilling the Centers for Medicare & Medicaid Services (CMS) for potentially billions of dollars.

The DOJ in March joined a lawsuit originally filed by a whistleblower in 2009 that accuses UnitedHealth, the largest Medicare Advantage insurer in the country, of reporting to the Centers for Medicare & Medicaid Services (CMS) inflated risk scores that indicated that patients were sicker than they really were.

The May 1 filing stated that, “UnitedHealth has engaged in various activities to increase the risk adjustment payments it received from CMS.”

“Since at least 2005, UnitedHealth knew that many diagnosis codes that it submitted to the Medicare Program for risk adjustment were not supported and validated by the medical records of its enrolled beneficiaries,” the filing stated. “UnitedHealth also knew that it was obligated to identify and delete these unsupported and invalid diagnosis codes.”

The DOJ asked that damages and civil penalties be imposed on UnitedHealth.

In February, the Justice Department joined a separate but similar whistleblower case filed in 2011 that accuses UnitedHealth of submitting false Medicare Advantage claims. That lawsuit also names 14 other companies, but the Justice Department is only participating in the case against UnitedHealth and its subsidiary, WellMed Medical Management. The DOJ has said that it plans to formally file a complaint in the case by May 16.

The Justice Department had asked that the two lawsuits be consolidated, but a federal judge on April 27 rejected that request, in part because the DOJ had not yet filed its complaints in the cases, which, the judge said, “will determine the scope and focus of both lawsuits.”

After the second complaint is filed, the DOJ may renew its effort to combine the cases.

The Center for Public Integrity has estimated that Medicare Advantage overpayments to all insurers, whether the result of fraud or errors, may have totaled as much as $70 billion between 2008 and 2013, while the Government Accountability Office (GAO) concluded in an April 2016 report that CMS is not doing enough to recover improper payments in Medicare Advantage.

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Federal Appeals Court Blocks Anthem-Cigna Merger

A federal appeals court has sided with a lower court judge in blocking Anthem’s proposed $54 billion purchase of Cigna.

Anthem had argued that combining the two companies would lead to efficiencies that would produce savings for consumers. But two of the three appeals court judges hearing the case supported a lower court judge’s conclusions that “the claimed savings were aspirational inasmuch as every proffered strategy either floundered in the face of business reality or was achievable without the merger, or both.”

“We hold that the district court did not abuse its discretion in enjoining the merger based on Anthem’s failure to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger in the fourteen Anthem states,” the majority opinion stated.

The dissenting judge, though, found Anthem’s position more compelling, writing, “the record overwhelmingly establishes that the merger would generate significant medical cost savings for employers in all of the geographic markets at issue here – overall, approximately $1.7 to $3.3 billion annually – and employers would therefore spend significantly less on healthcare costs.”

“And because the employers would spend less on health care for employees, they would have more to spend on employees’ salaries, thereby benefitting their employees,” the dissenting opinion stated. “Some of the ultimate beneficiaries of this merger would be the rank-and-file workers who are employed by the businesses that obtain insurance services from Anthem and Cigna. & The District Court clearly erred, therefore, in concluding that the merger would substantially lessen competition in the market in which insurance services are sold to large employers.”

Anthem, referencing the dissent, announced on May 5 that it will appeal the ruling to the U.S. Supreme Court.

“Citing the circuit split over the consideration of efficiencies in merger analysis, Anthem urges that 1960s-era merger precedents relied upon by the courts below must be updated to reflect the modern understanding of economics and consumer benefit,” Anthem stated in its announcement.

The U.S. Department of Justice, along with 11 states and the District of Columbia, filed a lawsuit in July to block the sale. Also in July, the Justice Department, with eight states and the District of Columbia, sued to stop the proposed $34 billion merger of Aetna and Humana. In January, a federal judge blocked that deal, stating in his opinion that there is “valuable head-to-head competition between Aetna and Humana which the merger would eliminate.”

The Anthem-Cigna merger would be the biggest ever in the health insurance sector and would create the largest health insurance company in the country.

Anthem and Cigna are suing each other over issues related to the attempted deal.

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