Cuts in Mental Health Funding Continue; Supreme Court to Rule

As America waits for the U.S. Supreme Court to hear oral arguments in, and decide on, the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA) in March, state cuts in mental health funding continue unabated in many states throughout the country.  As previously mentioned here, the PPACA review undertaken by the Court will not only focus on the constitutionality of the individual mandate but will also examine PPACA’s Medicaid expansion.  By expanding Medicaid, PPACA will provide coverage to millions of those living with serious mental illness.  PPACA also provides for increased community-based outreach, from changing the waiver laws to awarding grants for new programs, in order to further improve essential services for those living with mental illness.

While many fixate on late March, local governments continue a practice that started a few years ago:  slashing funding for mental health services.  Just last week, Chicago’s Department of Public Health announced they were closing half of their mental health clinics — disproportionately affecting the city’s African-American and Hispanic populations, according to advocates.  Over the last fiscal year, New York has cut its mental health budget by $95 million, and California has by $177 million.  According to a new NAMI study released late last year, from 2009 to 2012, four states have slashed their mental health expenditures by more than 30 percent; South Carolina, at the top of the list, has cut funding by nearly 40 percent.  Alaska and Nevada — the two states with the highest suicide rates in the country — are both in the top five.  In total, “general funds for mental health” are down $1.6 billion overall between 2009 and 2012.

Besides painful, the cuts are likely to be counterproductive:  advocates argue that they will actually cost states more in the long run.  Ronald Hornberg, director of legal and policy affairs at NAMI recently told ABC news that the cuts are resulting in those in need of services showing up in emergency rooms or prisons, where they are expensively boarded because there is nowhere else for them to go.   Eric Lindquist, a clinical therapist at the Chicago Department of Public Health, called the mental health clinics that Chicago has decided to cut, when compared to hospitalizations or incarcerations, “one of the taxpayer’s best bargains.”

At the same time, headlines late last week brought news that 20 percent of Americans were diagnosed with mental illness in 2010 — nearly one in four women and about one in six men.  Among other findings, nearly nine million Americans “thought seriously” about suicide in 2010, with over one million attempting to kill themselves.  Almost two million teenagers “experienced a major depressive episode.”  Those aged 18 to 25 had the highest incidence of illness:  nearly 30 percent.

Obviously, the incidence of illness and prevalence of spending cuts nationwide does not bode well for the future of mental health care in this country.  Those that depended on the services being cut are left to try and make it on their own, and those who worked for gutted agencies are looking for jobs.  And this is why advocates look toward March.  The Court’s decision later this year will shape the future of mental health services in this country for years to come — services that, right now, are increasingly endangered nationwide.

ACA Litigation, Implications for Medicaid and Mental Health Care

Receiving most of the attention and coverage following the passage of ACA has been the debate over the constitutionality of the individual mandate, in which Congress has required individuals to purchase health insurance.  This discussion has grown louder in the wake of the Eleventh Circuit’s Florida v. Health and Human Services decision, which invalidated the individual mandate as exceeding Congressional power under both the Commerce Clause and Taxing and Spending Clause.  As mentioned on this blog, that decision, along with the parties’ responses to it, has paved the road to Supreme Court review, likely early in 2012.

But also in the Eleventh Circuit’s decision — and a clear focus of the petitioners’ reply brief filed last week — is a discussion of whether, by expanding Medicaid under ACA, Congress exceeded its spending power.  This assertion was rejected by Judge Vinson in the Northern District of Florida, see Florida v. U.S. Dept. of Health and Human Svcs., 780 F.Supp.2d 1256, 1269 (N.D. Fla. 2011), as well as the Eleventh Circuit, see 648 F.3d 1235, 1268 (11th Cir. 2011).  The Eleventh Circuit relied on a few determinative factors to reject the argument:  (1) Congress has reserved the right to make changes to Medicaid, and the participating states were aware of this possibility; (2) the federal government will pay for nearly all costs of the Medicaid expansion; (3) states have “plenty of notice” to decide whether they want to continue to participate in Medicaid before the changes go into effect; and (4) it is not conclusive that states who do not participate in the new Medicaid lose their funding. Id. at 1267-68.

Putting constitutional concerns aside, petitioners’ argument, if adopted by the Supreme Court early next year, can work to undo much of the good the ACA accomplishes on the ground level, including the ACA’s positive effect on those living with mental illness.  Today, according to CMS, Medicaid pays for the mental health services of 58 million Americans. See Mental Health Services Overview, Centers for Medicare & Medicaid Services, available at https://www.cms.gov/MHS/ (last modified Sept. 6, 2011).  But according to an interesting Perspective piece in September’s issue of the New England Journal of American Medicine, the ACA would likely result in coverage for at least an additional “3.7 million currently uninsured people with severe mental illnesses and many more with less severe needs for mental health and addiction treatment.”  Colleen L. Barry and Haiden A. Huskamp, Moving Beyond Parity - Mental Health and Addiction Care under the ACA, 365 N. Engl. J. Med. 973-975 (Sept. 15, 2011).  Further, in addition to mandating that Medicaid benchmark plans and state-based insurance exchanges cover mental health services as part of an essential benefits package, the ACA assists in the coordination and implementation of more community-based services, from changing the waiver laws to assist the states in administering behavioral health services to establishing grants for further community outreach.  Id.

So instead of focusing on the individual mandate debate, those in the mental health field should note the Florida petitioners’ other target of attack — Medicaid expansion.  Already rejected twice, the ultimate resolution early next year will affect millions of mental health providers as well as those who use their services and will have a profound effect on the administration of mental health services in this country.

CLASS Agonistes

This week the Obama Administration formally abandoned the CLASS Act, a component of the ACA designed to provide long-term care. Robert Reich explains why it was doomed from the start:

First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.

Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums. Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.

The failure of CLASS has led to a flurry of proposals for alternatives to long-term care insurance. Some want a purely private sector solution. Maybe a new Rube Goldberg financing scheme could be implemented as a part of 401(k) plans. Perhaps Wall Street could sell disability derivatives and ability default swaps, engineering away the “risk of non-use” that keeps people from enrolling in programs like this.

In thinking about these proposals, my mind turns back to Robert Bork’s Antitrust Paradox. For Bork, antitrust law was “at war with itself” because it professed to promote simultaneously 1) a cutthroat competitive process that would encourage firms to maximize efficiency and 2) the threat of penalties for any firm that succeeded in being so efficient that it outcompeted all or nearly all of its rivals, if its efforts to do so stepped over the line into monopolization. Of course, one could resolve the so-called paradox if one recognized that the Sherman and Clayton Acts were passed not merely to maximize “consumer welfare,” but also to prevent concentrations of economic power from exercising excessive influence. But as the judicial interpretation of antitrust law took on more of the assumptions of the Chicago school, the paradox loomed ever larger in efforts to characterize antitrust as futile in an era of consolidation.

So what’s the CLASS paradox? There are actually several. Those who are not so well off (such as the 50% of American workers who made less than $26,000 last year) are likely to be the most in need of the program, but have the least amount to spare for premiums. Those in the top 1% (that is, those who make over $506,000 annually) will probably want to use their own savings and investments, rather than an insurance program, to pay for LTC. That leaves a middle 49%, making between $26,000 and $506,000, who are the most likely participants. But among that group, the more healthy, well-connected, wealthy, and younger you are, the less likely you are to buy in because the benefits are speculative, distant, and/or unneeded. And by and large, the sicker, more isolated, poorer, and older you are, the less likely you are to have the resources to participate now.

The question finally becomes: are we serious about social insurance in this country, or are we content with treating the very frail elderly like possessions in the home, to be insured as need and whim allow? The solution to the LTC crisis is a right to basic care and residence, funded by general tax revenues. Sure, we can have extensive and difficult debates about the obligations of individuals and families to contribute to long-term care, particularly in order to make better-than-basic options available. But the general focus needs to be on redistribution from the currently well-to-do to the currently needy, rather than an ownership society mirage of individuals anticipating distant futures that may never materialize (and that many or even most can’t very well prepare for even if they do materialize).

We should also consider funding more of Medicare out of general tax revenues, rather than from dedicated payroll taxes and premiums. Richard Kaplan has argued that this shift could better serve both equity and cost-control goals:

The use of general tax revenues, moreover, would make clear that financing the health care needs of the Medicare population is a societal undertaking, much like the Medicaid program, which targets low-income individuals of any age. At a minimum, eliminating the separate taxes for Medicare would simplify the lives of employees and employers alike and would additionally reduce the cost to employers of adding new employees. Perhaps changing the financing of the Medicare program along the lines just suggested might also make its beneficiaries less inclined to protest every proposed programmatic restriction and to understand that their benefits are indeed coming from a communal funding source. The resulting change in budgetary debates can only be salutary for the republic as a whole.

Health care finance in general must adopt to a world of massive and growing income and wealth inequality. From 1947-1980, when Americans’ incomes more or less grew together at the same rate, there was some justification for modeling the purchase of long term care as an investment that individuals would manage one by one, to reflect their tastes and preferences. Since 1980, the divergence in fortunes has become so great that such choices far more reflect ability-to-pay rather than taste for risk or comfort. It is unfair to expect struggling middle and lower class individuals to continue with such burdens. And to the extent tough choices need to be made, they ought to better reflect the collective wealth of the nation, rather than the tragic choices that can befall an individual forced to choose between preparing for bleak penury in old age or investing in present purchases that could make that neediness less likely.

Reflections on Some Failures of Medicaid Managed Care

The Washington Post has featured two interesting pieces recently on Medicaid managed care. Christopher Weaver reported on a battle between providers and insurers in Texas. Noting that “federal health law calls for a huge expansion of the Medicaid program in 2014,” Weaver shows how eager insurers are to enroll poor individuals in their plans. Each enrollee would “yield on average $7 a month profit,” according to recent calculations. Cost-cutting legislators see potential fiscal gains, too, once the market starts working its magic.

There’s only one problem with those projections: it turns out that “moving Medicaid recipients into managed care ‘did not lead to lower Medicaid spending during the 1991 to 2003 period,’” according to a report published by the National Bureau of Economic Research this month. Sarah Kliff is surprised to find that this is “the first national look at whether Medicaid managed care has actually done a key thing that states want it to do.”
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Community Based Medicaid ACOs in New Jersey: A Signature Away

Almost daily, there is a new article or study emphasizing the need for innovative reform to save Medicaid amidst growing threats of deep cuts to the already struggling program.  New Jersey, as one of the states with the highest Medicaid spending per beneficiary in the country, is paying attention.  And help may be on the way in the form of a medical home/safety net.

Showing promise, the medical home model of care is an oft proposed reform.  As Mary Takach explains in the July 2011 edition of Health Affairs, “[a] patient-centered medical home is an enhanced model of primary care in which care teams, led by a primary care provider, attend to the multifaceted needs of patients and provide whole-person, comprehensive, coordinated, and patient-centered care.”  (See “Reinventing Medicaid: State Innovations to Qualify and Pay for Patient-Centered Medical Homes Show Promising results,” Health Affairs, July 2011, 30(7):1325-34.)

According to the National Academy for State Health Policy, thirty-nine states are working to implement medical homes for Medicaid and CHIP participants, and New Jersey is one of them.  In September 2010, Governor Christie signed Assembly Bill 226 into law, which established a three-year Medicaid medical home demonstration project that, at minimum, will include “primary care providers utilizing a multi-disciplinary team that provides patient-centered care coordination through the use of health information technology and chronic disease registries across the patient’s life-span and across all domains of the health care system and the patient’s community.”  The statute requires that the payment system “be structured to reward quality and improved patient outcomes” and that Medicaid “[c]onsider payment methodologies that support care-coordination through multi-disciplinary teams, including payment for care of patients with chronic diseases and the elderly, and that encourage services such as: (a) patient or family education for patients with chronic diseases; (b) home-based services; (c) telephonic communication; (d) group care; (e) oral health examinations, when applicable; and (f) culturally and linguistically appropriate care.”   You can learn about various medical home initiatives in New Jersey at the National Center for Medical Home Implementation web site.

Takach’s report focuses on seventeen states that have aligned “patient-centered medical home standards with incentive payments to support reform in the delivery of primary care” — Colorado, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and West Virginia.

Although these programs are in their infancy, Takach interprets limited early data from a few states as encouraging. Vermont, for example, documented that inpatient use had decreased twenty-one percent, with a corresponding twenty-two percent decrease in per person per month inpatient costs, and that emergency department use had decreased thirty-one percent, with a corresponding reduction of thirty-six percent in per person per month costs (although its second pilot community had what Takach describes as “mixed results”).  Colorado similarly has seen decreases in its median Medicaid costs per patient for children.

Both Colorado and Oklahoma also have seen increases in participating providers since the medical home model started operating.  In Oklahoma, more than 244 new physicians enrolled in Medicaid.  Ninety-six percent of pediatricians now accept Medicaid in Colorado, up from only twenty percent before the program began.  Increasing the number of Medicaid providers is critical, given national shortages of available primary care Medicaid providers.

As Takach summarizes:

Some of the early findings from Colorado and Oklahoma, which have statewide Medicaid initiatives, demonstrate that modest increases in payment aligned with quality improvement standards have not only resulted in promising trends for costs and quality, but have also greatly improved access to care.  This is an important finding for other states as they consider how to meet the tremendous increase in demand for care that will result from the expansions to Medicaid in the Affordable Care Act of 2010.

But beyond a medical home, there needs to be a safety net for the most vulnerable urban populations who are, in a sense, medically homeless– and are, by EMTALA default,  frequent utilizers of high cost emergency room services.

As this blog and other sources, including The New Yorker, have discussed, New Jersey  is home to the Camden Coalition of Healthcare Providers, which describes itself as “a citywide organization of social workers, nurses, physicians, administrators, hospitals, health services organizations, and clinics that serve the health needs of Camden, New Jersey residents.  [It] work[s] in a variety of settings — from small neighborhood based practices to hospital based offices — with the goal of improving the coordination and capacity of the healthcare system for residents of Camden.” Dr. Jeffrey Brenner has been leading this effort since 2002.  His work offers promising program models for safety-net providers throughout the country to “improve the quality, capacity, and accessibility of the healthcare system for vulnerable populations.” Indeed, even though the budget bill signed by Governor Christie slashed Medicaid funding in New Jersey by $540 million, his Commissioner of Human Services has expressed continuing support for the Coalition’s pilot because it is seen as a smart reform that could save money while improving care.  Newark and Trenton also have established citywide healthcare coalitions to improve medical care for their vulnerable, underserved residents. And we at the Center for Health and Pharmaceutical Law and Policy have worked closely with the Greater Newark Healthcare Coalition.

In a recent post on the Health Affairs blog, Dr. Brenner and Nikki Highsmith note that although the Camden Coalition “has had preliminary successes and offers potential long-term savings, such community-based endeavors are difficult to initiate and sustain without start-up financing, ground-level technical assistance, and buy-in from state and local policymakers, health plans, patients, and community members.”  They thus call on CMS to “jump start investments in safety-net ACOs” by pursuing a national demonstration project to support programs similar to Camden’s pilot.

New Jersey is poised to be ready if CMS heeds this call for a national Safety Net ACO demonstration project because the Coalition and other New Jersey stakeholders, including Seton Hall Law Professor John Jacobi, have been active in advocating for a bill (S2443) authorizing geography-based Medicaid ACOs in New Jersey. As the Coalition’s web site summarizes:

The proposed New Jersey law would authorize a three-year Medicaid ACO demonstration project whereby community-based, non-profit coalitions can apply for recognition by the State of New Jersey as a Medicaid ACO.  The applicants must propose a geographic focus and will need 100% of the [general] hospitals, 75% of the primary care providers, [four] behavioral health providers, and two community [organizations] from that geography on the board of the organization.  The providers in the community will continue to receive their usual Medicaid payments and the ACO, if its providers meet quality benchmarks, would be eligible to receive shared savings payments, that can be distributed to participants based on a proposed gain sharing plan.

The proposed legislation specifically recognizes that patient-centered medical home models are one way, among others, to achieve coordination. On June 27, 2011, the Assembly and Senate passed S2443, and it is awaiting Governor Christie’s signature.

New Jersey’s proposed Medicaid ACOs go beyond Medical Homes. They are built on a foundation of sound primary care, but they offer the promise of reaching vulnerable populations in many settings, and of assuring that the right care is provided at the right location for people who are often left out of health reform efforts. The financing mechanisms provided by the bill awaiting the governor’s signature go some way towards financing these innovating community organizations, although, as Brenner and Highsmith point out, more needs to be done –particularly in the way of providing start-up funding for community providers.

Appropriately cultivated, patient-focused collaborations such as these may  yield synergies in care and cost of a substantial scale.   But another recent Health Affairs article suggests that adoption of the medical home may well develop at a slower pace in states, like New Jersey, where physicians tend to be organized in smaller practices.  New Jersey’s Medicaid ACO pilot could  help to accelerate the development of practice reformation in New Jersey — particularly if CMS provides the support advocated by Jeff Brenner and Nikki Highsmith.

It’s an exciting time for growth and innovation in the Garden State … if we just get that signature.

Medicaid Cuts and the March Toward a Charity Model of Care

Last week, Nic Terry compiled a list of current threats to Medicaid funding. As he noted then, Medicaid coverage is increasingly becoming meaningless for those seeking specialist care. Though more people are slated to enter the program, policymakers are unlikely to fix these flaws before they arrive. To the contrary, “physician reimbursement will decrease, and hospitals are looking to cross-subsidize some of their Medicaid patient expenditures from the privately insured.” Something to remember next time we hear about how imperative it is to cut public health expenditures: there is an inevitable pressure to “rob Peter to pay Paul.”

The budget drama narrative has so far focused on Republican efforts to further slash (or end) Medicaid, and Democratic resistance. But now even the Obama Administration is showing signs of reverting to form and endorsing a patina of Medicaid coverage without its substance. It is now too scared to even try to assess the full extent of the access problem. Like “death panels” before, the buzzword “spying on doctors” ended a promising program to measure the relative difficulty of getting access to care using different forms of insurance.

Obama officials are also engaged in more troubling substantive capitulations. Consider this CBPP report:

An Obama Administration proposal that’s on the table for budget negotiators would reduce federal Medicaid expenditures by reducing the federal share of Medicaid and CHIP costs, shifting costs to states and likely prompting states to cut payments to health care providers and to scale back the health services that Medicaid covers for low-income children, parents, people with disabilities, and/or senior citizens (including those in nursing homes). . . . The proposal would replace the various matching rates at which the federal government reimburses states for their costs in insuring people through Medicaid and CHIP with a single “blended rate” for each state. A state’s blended rate would be set at a level that provided the state with less federal funding than under current law, thereby saving the federal government money.

Abigail Moncrief has noted that states “are statutorily required—and should be judicially required—to pay a reasonable price for the services they buy” by the Medicaid Act’s equal access provision (42 U.S.C. 1396a(a)(30)(A)). But the Obama Justice Department is apparently complementing the budget team cost cutters by arguing that the Supremacy Clause does not “provide[] a cause of action for an injunction to enforce” the equal access provision. As Steve Vladeck observes, this is “a shift in policy that, if endorsed by the Supreme Court, would make it all-but-impossible to enforce the equal access mandate–one of the most important statutory requirements of the Medicaid program.”

Put it all together, and you have what bloggers Joan McCarter and Digby call a serious reversal for the President:

I don’t think anyone expected the Democratic leadership and the president to walk away from their own hard fought health care reforms before they even had a chance to be implemented. . . . I did think they would have wanted to give their legacy issue a chance to be implemented in full at the beginning, so they could continue to brag about bringing health care to 30 million uninsured Americans if nothing else. . . .But as the president says, in these tough times the government has to tighten its belt just like all American families. I guess he must realize that one of the things American families have had to cut out is their health insurance. So much for that legacy.

Perhaps a “balanced solution” to the budget debate is impossible now. But let’s at least acknowledge where we are heading with the endless Medicaid cost cutting. Much of the developing world has what is essentially a “charity option” for the very poor: they have nowhere near the purchasing power necessary to buy care, but have to rely on the kindness of strangers or NGO’s. We are not imminently headed to that level of catch-as-catch-can care for all of the Medicaid population’s problems: very urgent problems will continue to get attention due to some combination of EMTALA and Medicaid funding. But for many other types of issues, we may need to rely more and more on a combination of cost-shifting and charity. One model is the Global Eye Foundation in India, where “more than 80 percent of the surgeries that the model hospital performs are free of cost to the patient.” When you hear establishment economists talk about increasing the “competitiveness” of the American labor force, and fighting rising health care costs, remember that moving to a developing world model of care is one powerful way of achieving those ends.

Reason to Hope in NJ as State to Propose Stipend for Families Caring for the Developmentally Disabled

The Star Ledger reports that in the midst of group home waiting lists populated with thousands of developmentally disabled adults, New Jersey is on the verge of proposing help–in the form of at least $10,000 per year, perhaps $15,000, for families to “take care of their disabled children on their own.”

The waiting list for group home admission is said to top 8,000 each year with waits as long as 10 years for entrance.

The Star Ledger reports that in New Jersey

There are 8,840 people with developmental disabilities in 2,200 state-licensed homes, according to the state. About 8,000 more are on a waiting list to get into group homes or receive services designed to meet their needs. Because of budget cuts, in some years 100 people on the list have moved into homes.

According to the state, a group home costs approximately $120,000 per year to operate. With 8,840 in 2,200 homes, that comes out to roughly $30,000 per person.

The proposal will require federal approval, as Medicaid supplies funding for the need of the developmentally disabled. In this case, the federal government would be expected to provide approximately $45 million in matching funds.

The Star Ledger writes

Christie administration officials say the state would still try to build group housing for the developmentally disabled, but the payment would help families acquire services such as part-time aides, pay for summer camp or buy vehicles with wheelchair access. Families could also pool their funds to set up housing arrangements on their own rather than wait for a state-sponsored group home to open.

When only half of those in need are provided with what they need, and waits exceed 10 years to fill that need– the word “crisis” is not hyperbole. Anyone raising children can relate to demands– even, or perhaps more so, after those children have reached the age of majority. But families caring for the developmentally disabled are called upon to meet needs that often border (if not surpass) the heroic. And although money doesn’t solve everything, anyone who has been without knows it can help. Putting the access to services that money can buy into the hands of those struggling to provide for their children is a good step in the right direction.

Medicaid Targeted as States Cut Budgets

On January 21, Arizona passed legislation allowing the state to submit a Medicaid-waiver request to cut 280,000 people from the program next year.  When filed, it became the first official request to suspend PPACA’s “maintenance-of-effort” provision.  The mandate requires states to maintain early 2010 Medicaid eligibility levels until the 2014 nationwide expansion of eligibility.  Arizona could lose its entire federal Medicaid contribution, approximately $3 billion, if it fails to meet the maintenance-of-effort provision.

The Associated Press reports that most Arizonans who lose coverage are “non-pregnant, non-disabled, childless adults and also parents with incomes above 50 percent of the federal poverty level.”  According to the Arizona Republic, however:

Though the cuts have been billed as affecting only childless adults, about 30,000 of those who would lose coverage are parents and another 11,000 are children.

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Jonathan Blum, CMS Deputy Adminstrator, Speaks on ACOs

We’re waiting for the Department of Health and Human Services to release proposed regulations on Accountable Care Organizations.  This site has previously discussed the potential good and bad of ACOS (see here, here, and here).   I attended a conference last week at which an innovative model of “Medicaid ACO” was discussed.  The Medicaid ACO would be authorized in New Jersey under a bill pending before the NJ Legislature.  It is an exciting idea that will attempt to reach the poor and vulnerable who often lose out in health reform programs.  The godfather of the Medicaid ACO project is Jeff Brenner, about whom Atu Gawande recently wrote in the New Yorker.   (subscription required)    I’ll be blogging about the New Jersey bill in a future post.  The conference was funded by the Nicholson Foundation and presented  by the Health Care Quality Institute.

Speaking at the conference was Jonathan Blum, Deputy Administrator and Director of the Center for Medicare at CMS.  In discussing “Accountable Care Organizations and the Affordable Care Act,” Blum was in the difficult position of speaking about a topic of great interest, while not being able to discuss the contents of draft regulations that are no doubt nearing completion. Nevertheless, he made some interesting points that I’ll pass along.

Blum’s talk focused on policy positions that are driving HHS as it drafts the regulations.  The overriding policy positions he described included:

• The ACO regulations will not be “one size fits all.” He emphasized that CMS will be looking for innovative models, with different payment systems, and with different “on ramps” to formation and approval. He emphasized that CMS is interested in models that serve “safety net populations,” as CMS wants to ensure that the poor and underserved get the same opportunities as “suburban” folks. The primacy (at least in order of presentation) was welcomed by the NJ folks, whose model is directed to Medicaid recipients.
• The orientation, consistent with much of the ACO literature, is “patient first.” He distinguished this orientation from one that would see ACOs as a means for powerful interests to gain market share. That tension is, of course, evident in the ACA’s ACO provisions, as has been pointed out most eloquently by Tim Greaney. Blum described CMS as being focused on care systems’ sensitivity to patient and family concerns, and with payment programs oriented to health care “journeys” and not episodes.
• Clinical quality is key. CMS will focus on outcomes measurements “much more” than in the past. It will be interested in particular in quality measurements and patient experience.
• He spent a fair amount of time emphasizing that CMS does not regard the ACO program as static. CMS will constantly review payment and quality issues, with an eye toward updating oversight and program requirements. It will use payment incentives to drive quality improvements. He indicated that there is some tension between CMS’s interest in having quality be data-driven in ACOs with its insistence on protecting patient confidentiality and privacy issues. CMS is interested in encouraging patient advocacy efforts to support continued emphasis on patient privacy and confidentiality.
• In response to a question, Blum recognized the substantial tension between the ACO model’s emphasis on improving quality and reducing cost through organization of care on one hand, and the ACA’s continued embrace of patient choice of provider on the other. He indicated that this tension might best be addressed by ACOs and their constituent providers creating a sufficiently attractive delivery model that patients will want to be involved — exclusively. (Reaching this goal would clearly require unprecedented patient education efforts.)

The Q & A following Blum’s presentation was predictably frustrating on both sides, as could be anticipated in connection with a talk about not-yet-finalized regulations.  He recognized several outstanding issues that he was not at liberty to discuss, but which had been occupying those drafting the regulations, including:

• Will physicians be able to join more than one ACO? CMS is apparently considering different rules for primary care physicians and specialists, although Blum acknowledged that such overlapping provider networks will make the computation of “gain” difficult when gainsharing is implemented.
• Blum, although asked, would not bite on the question of “who will lead” (physicians or hospitals). He anticipates a variety of models, but stressed that no ACO would flourish without physician buy-in.
• The question of geographic exclusivity for ACOs engendered a similarly noncommittal response. Blum acknowledged the conceptual difficulties presented by such overlap, but also pointed to the negative implications of exclusivity on the robustness of competition.

So, it was an interesting discussion of general principles, whetting our appetites to see how HHS will “square the circle” — or circles — in the upcoming regulations.

A Doctor Speaks About Healthcare, Big Business and Justice

[Ed. Note: We received today's post from Timothy Shaw, M.D. F.A.C.S. as a comment in response to a post, "Health Care and Disparity in a 'Post-Racial' Era."]

Twenty years ago, upon entering private medical practice for the first time it took me about a month to realize that the United States needed “Health Care Reform.” After serving the previous fifteen years in the US Army Medical Corps, I started my first civilian medical job. I was asked to come to a hospital by another surgeon to perform an ear operation on a 3 year old boy at the same time as he would be performing an eye operation. This would save the child from two anesthetics on two different days. Since I had never worked at that hospital, and apparently in order to set me straight from the start, one of the head doctors at this hospital, came up to me in the preoperative holding area, and boldly shoved the child’s chart in my face, pointed to the child’s insurance (Medicaid (Welfare)) and shamelessly told me, “if all you are going to do, is to bring this “****” in here, then we don’t need you to come here.” The poor little guy sitting in the corner with his Mom, was smiling at us with his cute partially toothless grin, and coke-bottle glasses. He didn’t realize what one of his doctors called him because of his health insurance coverage.

Again, several months later I was called to a different hospital (one that I normally did not work at either) in the same city by an operating nurse who asked if I took Medicaid “welfare patients.” She asked me if I would come to their operating room to take a coin out of a 2 year old child’s esophagus. She informed me that their hospital doctors in my specialty did not take welfare patients and they were looking for someone to do the operation as the child had choked on a coin. “Apparently someone forgot to screen this child’s insurance before he came to the operating room.” I canceled my clinic patients and drove across town, performed an esophagoscopy and removed the coin.

Obviously, the doctors in these above scenarios did not support “the Public Option” (Medicaid).

What had happened to our Health Care System? What had changed? Where was the honor that we had in the Army Medical Corps? We treated everyone from Generals to Privates and their families with the same respect. In accordance with Geneva Conventions, we even treated enemy soldiers during the Iraq War in our Combat Support Hospitals with the same care that we treated our own.

In a significant measure the United States Private Health System had changed into “Big Business.” In some measure the humanitarian emphasis had eroded.

Although spurning the pharmaceutical industry as “conflict of interest” entities, not suitable for proper patient care, surprisingly, doctors saw no apparent conflict of interest in merging with the Health Insurance Industry. Doctors and the Health Insurance Business became so closely aligned that their DNA intertwined to form a new species. This powerful new combined-arms team became the forme fruste of our new United States Health Care Industry. Doctors armed with new found business tactics, and the Health Insurance Industry armed with the legitimacy of the Doctor’s legal authority to limit health care to patients became the de facto United States Health Care System.

The business meeting replaced the medical conference to discuss “patient care” issues. To cope with the ever burgeoning bureaucracy, more and more doctors went into administration. More doctors have their MBA’s then carry black bags and make house calls. Mergers, Acquisitions, Expansions, Contracts, Covered Lives, Marketing Strategy, Demographics, Competition Threat Forecasts, Actuarial Science, and Health Insurance became the focus of many doctors. Time was spent on avoiding insurance business risk, trying to avoid the high risk patients, finding the better payer groups, etc. Hospitals became less hospitable. Doctor’s began to discharge patients so rapidly, that in the mid 1980’s the majority of States passed consumer protection laws (”Drive By Delivery Laws”) to protect mothers/newborns from being discharged from the hospital too soon.

Currently, the U.S. health care system is outrageously expensive, yet inadequate. Despite spending more than twice as much as the rest of the industrialized nations ($7,129 per capita), the United States performs poorly in comparison on major health indicators such as life expectancy, infant mortality and immunization rates. Read more

NEW JERSEY SUED FOR CONSTITUTIONAL VIOLATIONS IN DENYING IMMIGRANT PARENTS ACCESS TO STATE-FUNDED MEDICAID

Class Action Seeks Relief for 12,000 Lawful Permanent Residents Affected by Immigration-Based Medicaid Cuts

NEWARK, NJ - Seton Hall Law School’s Center for Social Justice and Gibbons, P.C., filed a class action complaint today in New Jersey, alleging that the State’s Department of Human Services (”Agency”) is violating permanent residents’ equal protection rights under the United States and New Jersey Constitutions by denying them State-funded Medicaid because of their alienage and immigration status. The Plaintiffs, many of whom work at low-wage jobs, are lawful-permanent-resident parents in New Jersey, who because of their low-income were deemed eligible to receive and, until recently, did receive State-funded Medicaid known as New Jersey FamilyCare (”NJFC”). Citing the State’s financial crisis, however, in April and July of this year, the Agency terminated Plaintiffs’ Medicaid coverage, stating that Plaintiffs were no longer eligible for NJFC because they have not been lawful permanent residents for at least five years.

The complaint describes the harm experienced by the nearly 12,000 low-income, lawful permanent residents affected by those cuts: without NJFC assistance, Plaintiffs can no longer afford regular checkups, preventive care, and treatment for serious illness. One of the named plaintiffs, a single mother with two small children, had surgery to remove a kidney in 2007. She is now unable to afford monitoring of her kidney problems or medical care in the event of future illness. Two other plaintiffs-working parents from Haiti and Ecuador-required emergency medical care last month, but after being terminated from State-funded Medicaid, were unable to pay for such treatment. Several of the Plaintiffs have family histories of heart disease, high cholesterol and diabetes and worry that without regular check-ups and preventive care, they will be unable to prevent irreversible damage to their health.

The complaint alleges that by singling out this group of immigrants for termination of their healthcare coverage, the Agency is discriminating against plaintiffs on the basis of their alienage and immigration status in violation of the equal protection guarantees of the Federal and State Constitutions.

“Not only is it unconstitutional to distinguish between New Jersey residents on the basis of their alienage and immigration status when dispensing critical health care assistance-it is counterproductive,” said attorney Jenny-Brooke Condon, an Associate Professor at Seton Hall’s Center for Social Justice. “Many of the 12,000 lawful permanent residents affected by these State-Medicaid cuts are hard-working residents of the State, who pay taxes and support their families by working inlow-wage jobs. Ensuring that the working poor receive essential, preventive healthcare and treatment for illness keeps New Jersey residents healthy, which, in turn, keeps them working.”

Many of the Class Representatives named in the lawsuit expressed outrage at being singled out for healthcare cuts on the basis of their immigration status. “I work hard, pay taxes, and play by the rules; I am a lawful resident of this State,” said Class Representative Nadia Chery, a native of Haiti who works as a home healthcare aide. “So when the government said it was cutting my benefits because of my immigration status, it was as if I had done something wrong because I am an immigrant. I felt that I was being discriminated against.”

Class Representative Manual Guaman, a native of Ecuador who works as a cook to support his wife and three small children, described the anguish he felt when he suffered a severe allergic reaction in July after losing his NJFC assistance. “I didn’t know what to do. Should I get treatment at a hospital, knowing I will not be able to afford the bill, or should I take my chances that I will get better?” said Guaman. “I decided to go to the hospital, thinking that if I became sicker I might not be able to keep working and support my family. Being healthy for my family is my first priority.” But Guaman added that not being able to pay the hospital bill he received after his July emergency room visit has discouraged him from seeking follow-up care and additional medical assistance.

In addition to asserting equal protection claims, the complaint alleges that in denying Class Members NJFC assistance, the Agency has also violated a New Jersey statute governing the State Medicaid program. That statute provides that both citizens and lawful permanent residents are eligible for State-funded Medicaid. The complaint filed today amends a complaint filed by Plaintiffs on June 29, 2010, and newly challenges the Agency’s July 6, 2010 regulation, which the Agency published only after it had already terminated most Class Members’ NJFC assistance. Plaintiffs seek a declaration from the court that the agency’s actions and regulation violate the Federal and State Constitutions and the NJFC statute, and also seek injunctive relief restoring Class Members’ NJFC assistance.

A copy of the complaint can be found at http://law.shu.edu/ProgramsCenters/PublicIntGovServ/CSJ/upload/Guaman_Amended_Complaint.pdf

Seton Hall University School of Law, New Jersey’s only private law school and a leading law school in the New York metropolitan area, is dedicated to preparing students for the practice of law through excellence in scholarship and teaching with a strong focus on clinical education. The Center for Social Justice, a core of Seton Hall Law School’s Catholic mission, provides clinical education and volunteeropportunities to students and engages in various forms of advocacy, scholarship and direct legal services in an effort to secure equality, civil rights and legal protection for individuals and communities in need. Seton Hall Law School is located in Newark. For more information visit, http://law.shu.edu/.

The law firm Gibbons P.C. sponsors the John J. Gibbons Fellowship in Public Interest & Constitutional Law under the guidance of John J. Gibbons, former Chief Judge of the United States Court of Appeals, Third Circuit, and Lawrence S. Lustberg, Director of the Gibbons Fellowship Program. The Gibbons Fellowship, supported by the broader resources of the firm as a whole, undertakes public interest and constitutional law projects and litigation. Working with a broad cross-section of public interest groups, the Fellowship Program has become widely known in New Jersey and nationally as a voice for the poor and underrepresented. The Fellowship has been and remains involved in the most significant and controversial issues that confront the Federal and State courts today. For more information visit http://www.gibbonslaw.com/about/index.php?view_page=3

Medicaid Programs: State Flexibility for Medicaid Benefit Packages

By Ryan S. McCrosson

This post seeks to further an understanding of 42 CFR 440 (“The Rule”), State Flexibility for Medicaid Benefit Packages.  Specifically, it will provide (1) an overview of what rulemaking is about, (2) the best argument in support of 42 CFR 440, (3) the best argument against 42 CFR 440, (4) and the blogger’s position on the rule.

The Rule implements provisions of § 6044 of the Deficit Reduction Act of 2005 (“DRA”), which amends the Social Security Act (“SSA”) by adding § 1937 to the definition of coverage of medical assistance under approved State plans.  Generally, The Rule provides states with increased flexibility under an approved Medicaid plan to define the scope of covered medical assistance.  Medicaid is a federally and state financed program by which medical assistance is furnished to families with dependent children and individuals who are aged, blind or disabled.  State eligibility and federal funding is contingent upon federal approval of the state’s plan.  Prior to the passage of the DRA, states were required to offer the standard minimum benefits packaged as it is defined by § 1902(a)(10)(A) of the SSA.

However, § 6044 of the DRA provides states flexibility with regard to the standard minimum benefits package.  § 6044 of the DRA adds § 1937 to the SSA.  § 1937 provides states with the option of amending their Medicaid plans to provide “Benchmark Benefit” packages or “Benchmark-Equivalent” packages instead of the standard minimum benefits package.  The following link provides the Center for Medicare and Medicaid Services’ description of, and requirements for, Benchmark and Benchmark Equivalent Benefits packages:

http://www.cms.gov/DeficitReductionAct/Downloads/Flexibility.pdf.

A Benchmark Package is defined by § 440.330 of The Rule and generally must be equivalent to either of a Federal Employees Health Benefit Plan Equivalent Coverage, a State Employee Coverage, a Health Maintenance Organization plan or other coverage approved by the Secretary of Health and Human Services.  Specifically, § 440.330 provides:

“Benchmark coverage is health benefits coverage that is equal to the coverage under one or more of the following benefit plans:

(a) Federal Employees Health Benefit Plan Equivalent Coverage (FEHBP – Equivalent Health Insurance Coverage).  A benefit plan equivalent to the standard Blue Cross/Blue Shield preferred provider option service benefit plan that is described in and offered to Federal employees under 5 U.S.C. 8903(1).

(b) State employee coverage.  Health benefit coverage that is offered and generally available to state employees in the State.

(c) Health maintenance organization (HMO) plan.  A health insurance plan that is offered through an HMO, (as defined in section 2791(b)(3) of the Public Health Service Act) that has the largest insured commercial, non-Medicaid enrollment in the state.

(d) Secretary-approved coverage.  Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage to meet the needs of the population provided [in] that coverage….”

A Benchmark-Equivalent Package is defined by § 440.335 and generally requires benefits within each of the following categories of basic services: inpatient and outpatient hospital service, physicians’ surgical and medical services, laboratory and x-ray services, “well-baby” and “well-child” care including age-appropriate immunizations and other appropriate preventive services, as defined by the Secretary.  The coverage must have a value that is at least equivalent to coverage under a Benchmark Package as outlined in § 440.330.  Specifically, § 440.335 provides:

“(a) Aggregate actuarial value.  Benchmark-equivalent coverage is health benefits coverage that has an aggregate actuarial value, as determined under § 44.340, that is at least actuarially equivalent to the coverage under one of the benchmark benefit packages described in § 440.330 for the identified Medicaid population to which it will be offered.

(b) Required coverage.  Benchmark-equivalent health benefits coverage must include coverage for the following categories of services”

(1) Inpatient and outpatient hospital services.

(2) Physicians’ surgical and medical services.

(3) Laboratory and x-ray services.

(4) Well-baby and well-child care, including age-appropriate immunizations.

(5) Emergency services

(6) Family planning services and supplies and other appropriate preventive services, as designated by the Secretary.”

Arguments against the rule include worries that the Benchmark or Benchmark-Equivalent Benefit packages are overly restrictive in their allowance for benefits, and therefore, will deter needy individuals from receiving appropriate care.  Specifically, the low-income populations are argued to be at risk.  Cutting against these arguments is the fact that The Rule is only an option for the state.  Therefore a state is not required to switch the standard benefit package with a Benchmark Package or a Benchmark-Equivalent Package.  Furthermore, the General Accountability Office’s assessment of The Rule has projected a $2.3 billion cost savings from 2006-2010, and, as such, arguments in favor of the rule are founded in cost savings.  The GAO’s assessment may be accessed at:

http://www.gao.gov/decisions/majrule/d09259r.htm

Developments since enactment include numerous state application for, and approval of, alternative benefits under the DRA.  These states Include West Virginia, Kentucky, Virginia, Idaho, Washington, Wisconsin, Kansas and Missouri.  These plans require either mandatory or voluntary enrollment and target specific subpopulations.  Wisconsin’s Badgercare Plus Benchmark Benefit Plan, for instance, requires enrollment for pregnant women and infants with incomes between 200% and 250% of the federal poverty level.  But, as with many of the plans, provides additional services to this specific subpopulation.  As such, it may be concluded that, at least in part, the documented cases of states switching to Benchmark plans derive from a desire to increase health care services for specific, at risk, subpopulations of the specific state as opposed to a general desire to cut costs.  The CMS’s assessment of these plans may be accessed at:

http://www.cms.gov/MedicaidGenInfo/Downloads/070609benchmarkreport1937.pdf

Because this rule maximizes state flexibility to target specific subpopulations of the needy, assures that beneficiaries get quality care and reduces the federal budget deficit, it would seem that the benefits of The Rule outweigh the possibility of diminished care.

Is Medicaid a Right? Are Medicaid Rate Cuts Unconstitutional?

By: Matt McKennan

Seton Hall Law
Class of 2011

Expanding Medicaid Rolls and Limited Access to Care

Medicaid beneficiaries have a difficult time accessing care.  Physicians are not required to participate in the program and due to low reimbursement rates, among other factors, many physicians choose not to join.  The President, federal and state lawmakers, physicians, hospitals, and patients (regardless of their political views) undoubtedly agree that access to care for Medicaid beneficiaries is a growing problem.  Notably, the Patient Protection and Affordable Care Act (ACA) will likely add approximately 16 million beneficiaries to state Medicaid rolls.  According to Senator Lamar Alexander of Tennessee, “it dumps 15 to 18 million low-income Americans into a Medicaid program that none of us would want to be a part of because 50 percent of doctors won’t see new patients. So it’s like giving someone a ticket to a bus line where the buses only run half the time.”

Interestingly, Medicaid’s “Equal Access provision” requires that participating states,

“assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

If Sen. Alexander is right — and there is substantial evidence that Medicaid participants face significant obstacles to access – then states are violating federal law, or the federal law is so lax in its enforcement or its mandates that it has become ineffective.  Health reform vests huge responsibility in the hands of the states, and the ability to enforce federal law or the willingness of states to comply will play a crucial role in achieving its goals.

In response to Medicaid’s expansion, states face a number of critical decisions.  Currently, states are contemplating cuts to already low Medicaid rates.  According to the National Association of State Medicaid Directors, “state budget shortfalls in the coming fiscal year . . . will total $140 billion.”  Adding additional pressure, state constitutions generally require that state governments maintain a balanced budget.  As Medicaid expands, states will face even more difficult decisions when balancing budgets and implementing Medicaid consistently with federal guidelines.

How Will the States Respond?  Are Rate Cuts the Final Answer?

In response to increasing federal demands and local financial pressures, states are pursuing legal action as a successful lawsuit would surely decrease future state obligations under Medicaid.  States are also enacting legislation to oppose the bill and according to the National Conference of State Legislatures, 36 states have legislation to oppose certain reforms.  Others are lobbying Congress for repeal and those interested have already attested “that if any federal health care takeover is passed in 2010, I will support — with my time, money, and vote — only candidates who pledge to support its repeal and replacement with real reforms that lower health care costs without growing government.”

States may eventually decide to drop the program altogether.  After all, Medicaid is voluntary.  States are not obligated to provide medical assistance if they choose not to participate.  According to the Heritage Foundation, states would save over $1 trillion by opting out and “failure to leave Medicaid might be viewed as irresponsible on the part of elected state officials.”   On March 18, Arizona dropped its Children’s Health Insurance Program, foregoing millions in federal aid and leaving 47,000 children without insurance.  Earlier this year, Governor Jim Gibbons of Nevada stated, “[b]ecause it appears Sen. Reid’s plan is no longer viable, this crushing additional cost to the state isn’t forcing us to seriously consider opting out of Medicaid at this time.  However, if Congress wants to pass the buck and shift the fiscal burden of health care reform directly onto the states instead of looking seriously at ways to reduce spending and costs, we will be forced to revisit the issue.”  Like the Reid bill, the ACA also increases state Medicaid obligations.  And even if it increases the federal share, it is still worth asking whether Gov. Jim Gibbons  is once again seriously considering opting out of the program.

Alternatively, States may decide that Medicaid is just not that bad.  They may decide that it might just be a good idea to take advantage of the federal government’s helping hand.  Realistically, it is highly unlikely that states will drop Medicaid.  Dropping a program that provides care to low-income families is morally indefensible, especially without an alternative safety net.  Moreover, dropping Medicaid is fiscally irresponsible as the uninsured would undoubtedly wind up in emergency rooms seeking high-cost care at the private payers’ expense.  However, even if states decide to continue participating in Medicaid, the requirements of Medicaid must be enforced to achieve success.  After all, states administer Medicaid and states set reimbursement rates.  Drastic rate cuts by financially strapped states will undeniably balance budgets, but at the same time cuts will likely limit access to care.  So what happens when states cut Medicaid rates? See here, here, and here.

Is Medicaid a Right?  Are Rate Cuts Unconstitutional?

Thankfully, Medicaid’s “Equal Access provision” requires that states pay reimbursement rates that are sufficient to assure access to care.  Unfortunately, it is not easily enforced and the remedies are limited.  On the one hand, the federal government can withdraw its support from states that fail to live up to the statute’s demands.  On the other hand, providers and beneficiaries can also pursue legal action.  Legal action, however, is not that easy.

Shortly after the Civil War, Congress enacted the Civil Rights Act of 1866, providing equal rights to all “persons within the jurisdiction of the United States.”  In response, many Southern Governors refused to comply, frustrating Congressional intent as the KKK violently opposed the bill and terrorized the South without state intervention.  Congress then enacted 42 U.S.C. § 1983.  It provides a private cause of action against state or local actors that violate federal rights.  At its most basic level, the cause of action reins in rogue states and local actors.  A plaintiff that pursues a Section 1983 claim to enforce Medicaid’s requirements is in essence alleging that a state is violating federal rights by failing to comply with the federal law (Medicaid).

Initially, the Supreme Court adopted this line of reasoning.  In Wilder v. Virginia Hospital Association, the Supreme Court held that Medicaid providers can file suit under Section 1983 when a state fails comply with Medicaid by setting unreasonable and inadequate rates.  Notably, Chief Justice Roberts, as deputy Solicitor General at the time, filed a brief in Wilder arguing that private citizens cannot force states to comply with Medicaid under Section 1983.  After Wilder, courts consistently held that Section 1983 provided a cause of action to enforce state compliance with Medicaid.  Over time, the circuit courts split regarding what the “Equal Access provision” requires.  Some courts held that it requires states to conduct a study before setting rates, while others held that it requires states to achieve results, such as setting rates that actually achieve equal access to care, regardless of a study.

However, in Gonzaga v. Doe, the Supreme Court  limited the availability of a cause of action under Section 1983.  Interestingly, now-Chief Justice Roberts argued before the Court in Gonzaga as well, this time successfully.  Since Gonzaga, circuit courts throughout the country have refusedto allow Medicaid providers and beneficiaries to file suit under Section 1983 to enforce Medicaid’s “Equal Access provision” holding that Medicaid does not confer individual rights.  Compare pre-Gonzaga Orthopaedic Hospital with post-Gonzaga Sanchez.  In effect, Roberts’ argument in Wilder is now law and private citizens can no longer file suit under Section 1983 when states cut rates and limit access to care.

Fortunately, providers and beneficiaries have one more option.  Rather than filing suit under Section 1983, providers and beneficiaries are now successfully pursuing claims under the Supremacy Clause.  Under this theory, a state law that cuts reimbursement rates and decreases access to care conflicts with the “Equal Access provision.”   Therefore, because the state law conflicts with federal law, and federal law is the supreme law of the land, the state law is null (unconstitutional).  Plaintiffs have filed successful actions under the Supremacy Clause in California, resisting attempts to cut Medi-Cal payments for purely budgetary reasons.  A similar suit was filed in Washington last year.  On January 28, the Connecticut Association of Healthcare Facilities also filed suit, pursuing a Supremacy Clause action to enforce the “Equal Access provision.”

Although plaintiffs are experiencing success under the Supremacy Clause, there are a few drawbacks.  Unlike a suit under Section 1983, an action under the Supremacy Clause does not generally result in legal damages or attorney’s fees.  Instead, a plaintiff simply enjoins the unlawful state action.  Moreover, Justice Scalia and Justice Thomas have observed that the Supremacy Clause does not provide a cause of action to enforce Medicaid.  Rather, the Justices note that the only remedy is the withdrawal of federal funds.  Therefore, under the only legal theory available to enforce Medicaid at this time, states generally face no financial responsibility for cutting rates and decreasing access.  Further, the only cause of action to enforce Medicaid may rest on shaky ground.

In summary, history demonstrates that federal preemption will play a major role in implementing health reform, and these lessons must not be ignored.  The ACA expands Medicaid rolls and relies greatly on state compliance.  States have a limited number of options in response to their increasing responsibilities.  Eventually, constitutional challenges will end and states will likely continue to provide Medicaid assistance.  However, financially strapped states may end up administering a watered down program that denies access to care.  Therefore, to achieve the goals of reform, it is vitally important that states face realistic consequences if they refuse to administer Medicaid in compliance with federal law.  Ultimately, however, if states continue to cut rates, a strict federal standard regarding Medicaid reimbursement may be necessary.

A New Option For States: Medicaid Self-Directed Plans

By: Nicole Hamberger
Seton Hall University School of Law
Class of 2011

Medicaid beneficiaries often need assistance in personal daily activities such as dressing, grooming, bathing, and meal preparation.ⁱ For some of these consumers, home-care agencies can manage the care.ⁱⁱ But for others, the use of such agencies poses significant challenges and even perils.

When there are worker shortages at home-care agencies, when physical distance impedes access to rural consumers, and when workers are unwilling to enter high-crime urban areas where the beneficiary resides, many Medicaid beneficiaries lose access to care.ⁱⁱⁱ Further, many agency workers refuse to work weekend or evening hours, making the provision of care at such times difficult if not impossible to secure.^iv The inability to get needed services due to lack of access is only one potential problem arising from traditional home-care agency use.

Other problems arising from the use of home-care agencies relate to worker limitations. Restrictions on the kinds of care provided may stem from liability concerns, such as the inability for home-care agency workers to administer medications or supply transportation.^v Agency workers do not provide assistance in securing or installing home modifications or assistive devices, such as wheelchair ramps or microwaves, which would allow Medicaid beneficiaries to be more independent at their homes.^vi Other limitations exist when language barriers or cultural misunderstandings prevent proper and effective communication.^vii Such limitations can seriously blight the efforts of even the most well-meaning providers of care.

By the 1990s, many states became aware of these and other problems that certain Medicaid beneficiaries face using home-care agencies.^viii Self-directed care was proposed as an alternative method of care to Medicaid beneficiaries.^ix Self-directed care is defined as “a service delivery mechanism that empowers individuals with the opportunity to select, direct, and manage their needed services and support identified in an individualized service plan and budget plan.”^x The Robert Wood Johnson Foundation awarded 19 states grants to create self-determination care methods in the mid 1990s, including New Jersey, Pennsylvania, and Florida, pursuant to section 1905(a)(4) of the Social Security Act.^xi Those states’ projects eventually became Medicaid-funded programs under section 1915(c) of the Social Security Act, known as the “home and community-based services waiver program.”^xii Then, in the late 1990s, Robert Wood Johnson decided to offer these grants again in hopes of developing “Cash and Counseling” (C&C), a “national demonstration and evaluation project in three states” which was a form of self-directed care.^xiii C&C projects became demonstration programs under Section 1115 of the Social Security Act, permitting the self-direction option.xiv Then, when the Deficit Reduction Act (DRA) of 2005 took effect, States could offer the self-directed option through section 1915(i) as well as section 1916(j) of the Act.^xv Given this plethora of authority, the Centers for Medicare and Medicaid (CMS) submitted a Final Rule on October 3, 2008 to “provide[ ] guidance to States that want to administer self-directed services through their State Plans as authorized by the Deficit Reduction Act of 2005.”^xvi

The Rule first explains that the Act extends to those states that wish to create a state self-directed service plan; it is purely optional.^xvii If a state so chooses to create such a plan, then that state’s plan will apply only to those individuals who would otherwise receive traditional state-based care.^xviii Then, “within an approved self-directed services plan and budget, individuals can purchase personal assistance and related services and hire, fire, supervise, and manage the individuals providing such services.”^xix Individuals are also permitted by the Act to “hire any individual capable of providing the assigned tasks, including legally liable relatives, as paid providers of the services” and may “purchase items that increase independence or substitute for human assistance to the extent that expenditures would otherwise be made for the human assistance.”^xx The regulations do not explicitly address illegal immigrants; however, one provision of the act may implicitly allow such individuals to qualify for self-directed workers; that which allows for any “legally liable relative” to qualify as caregiver. A “legally liable relative” is described below:^xxi

“legally liable relatives means persons who have a duty under the
provisions of State law to care for another person. Legally liable
relatives may include any of the following:

(1) The parent (biological or adoptive) of a minor child or the guardian of a minor child who must provide care to the child.
(2) Legally-assigned caretaker relatives.
(3) A spouse.” ^xxii

Therefore, an illegal immigrant could potentially qualify as a caregiver by virtue of his or her relationship to a legal citizen who qualifies for Medicaid.

The Act states that a state’s “self-directed PAS ‘budget’ is not to exceed the amount that the State would pay for the services and supports if those services and supports were provided under the traditional service delivery model.”^xxiii Yet while the individual state sets the budget (and informs the individual of his or her budget’s limit), it is the individual covered by the plan or his or her defined representative who may “exercise choice and control over the budget, planning, and purchase of self-directed PAS, including the amount, duration, scope, provider, and location of service provision.”^xxiv Room and board is not covered by the Act, nor is the option to live in a traditional live-in care environment, unless the owner of such an entity is a spouse or blood relative.^xxv In dealing with monetary allocation, the Act “indicates that states may employ a financial management entity to make payments to providers, track costs, and make reports.”^xxvi. Such entities are to be compensated not on a commission basis, but “in accordance with section 1903(a) of the [Social Security] Act.”^xxvii. Section 1903 of such act provides that entities are to be compensated on a percentage basis of the sums spent in accordance with the lengthy provisions of section 1903(a). ^xxvii.

The individualization and flexibility permissible by the Act are among its greatest potential benefits. The Act delegates to the individual the opportunity to control every aspect of his or her care, including the allocation and management of care resources. According to the studies conducted in the aforementioned Robert Wood Johnson grant programs, self-directed plans result in “fewer unnecessary institutional placements . . . higher levels of satisfaction . . . fewer unmet needs . . . higher continuity of care because of less worker turnover . . . and efficient use of community services and supports.”^xxviii Further, highly personal activities such as toileting and bathing should rightly be conducted by an individual whom the beneficiary trusts and feels comfortable around. Two authors have suggested that minority patients will particularly benefit from such services, as they are able to hire and train culturally similar or understanding individuals, since “[w]ithout sensitivity to the cultural norms of the beneficiary, valuable information about the true level of need can easily be overlooked or lost.”^xxvix There is also evidence that enrollees may receive more of the care that they are authorized to receive when using a self-directed plan.^xxx

However, there are many concerns that arise under the Act as well. First, the ability of individuals to know what kind of care is truly best for them is questionable. “Part D” of Medicare, gives all senior citizens federal funds to buy the prescription drug plan of their choice, regardless of their sophistication or knowledge on the matter. Similarly with state-directed plans, there is concern that the caregivers chosen by Medicaid beneficiaries will be “inadequately trained” since no qualifications are necessary to be considered a caregiver, unlike traditional plans.^xxxi There is also concern that “that there [will be] insufficient oversight of the care being provided beneficiaries, and that the potential for fraud, abuse, neglect, and exploitation” may increase as there is no longer direct state control over the care provided.^xxii Further, there are concerns that state-directed service plans cost more than traditional agency-delivered services; something that CMS concedes may be true.”^xxxiii Since the Act does not require states to limit the number of Medicaid beneficiaries who choose a state-directed plan, there could be enormous costs for taxpayers.^xxxiv Further, the items participants may buy under the act which “increase independence or substitute for human assistance” and include “additional goods, supports, or services” are not further defined, allowing for potentially questionable purchases under state funds; purchases not permissible if they were using the money in the traditional home-care system.^xxxv

While the Act is commendable for providing an alternative to the traditional home-care model, perhaps the flexibility in care options should be balanced by a more comprehensive set of regulations and requirements; only then will worthy individuals receive the most individualized, albeit cost-effective, care possible.
________________________________________________________________________________________________________________________
i Robert Wood Johnson Foundation, Developing and Implementing Self-Direction Programs and Policies: A Handbook (2009), www.cashandcousneling.org/resources/pdf/cc-full.pdf

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Who’s the New Guy? – Obama Announces Choice for Next CMS Director

President Obama has announced his choice for the position of director of the Centers for Medicare & Medicaid Services (CMS), Dr. Donald Berwick, a pediatrician, professor, and advocate of improving patient care.  The CMS has been without a permanent administrator since 2006.  Berwick, whose appointment must be approved by the Senate before he may assume the position, certainly has the credentials for the important role the CMS director will surely play in the coming years.  Still, whether Republican Senators will be basing their confirmation decision on credentials or resentment of health care reform’s passage is yet to be seen.

Berwick is best known for founding the Institute for Health Care Improvement.  The Institute for Health Care Improvement is a non-profit think tank that is dedicated to helping hospitals improve their patient care delivery.  As attested to by the Institute’s co-founder Dr. Paul Batalden, Berwick takes incremental approaches to improving patient care that are cost-effective and do not lead to the rationing of care.  For example, Berwick finds that reducing the prevalence of hospital-acquired infections through something as small as keeping medical equipment sterile can help to bring down the rate of medical errors.

Berwick is also a proponent of utilizing medical information sharing, and is often called blunt in regard to how he finds the American health care system inefficient in delivering patient care.  Additionally, Berwick has advocated for patient rights on numerous levels, using a philosophy of patient-centered medicine.  He wants doctors to be rewarded based on the health care outcomes of their patients instead of how many procedures a doctor has performed. Having a leader interested in implementing infrstructural changes which incentivize outcomes as opposed to procedures as paydays without regard to outcome, is, many think, a step in the right direction. It is also worth noting that Berwick himself will be taking more than a 66% pay cut if he is appointed as the director of the CMS.

While Berwick may not have functioned as the head of a health care system in his career, he is not new to the world of national health policy.  In 1998, he was on President Clinton’s advisory commission that recommended ways to reduce medical mistakes and ensure consumer protection in the American health care system.  And also served at that same time as  Chair of the agency that is now known as the Agency for Healthcare Research and Quality. Berwick has also played a part in improving Britain’s National Health Service, for which he was given an honorary knighthood by Queen Elizabeth II.

Since Obama’s health care overhaul “contemplates key roles for both programs in extending insurance coverage to 32 million people at a cost of $938 billion over 10 years,” if selected to be the CMS’s director, Berwick will certainly need to bring his A-game in helping change the way our current health care system consumes Medicare and Medicaid resources.  Many also hope that good Medicare reforms will start a trend, motivating private insurance companies to also make cost-saving changes.  Before that challenge, Berwick will have to get past a Senate confirmation.  Republican Senators are likely going to make the process a rigorous one, where they will grill Berwick on how exactly he plans to effect the new health care reform legislation.

Given the importance of the CMS and the fact that it currently has no director, it would behoove the Senate to quicken the process of Berwick’s selection, considering his credentials and commitment to the rights and needs of American patients.  As the Washington Post said, “supporters and opponents of the new health-care legislation ought to be able to agree that leaving the agency without a confirmed head is not healthy.”  The job needs to be filled, and instead of using political tactics through rehashing the health care reform debate, the Senate should focus on the many qualities that Berwick has to offer.

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