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

An “Unknowable” Number of Bureaucrats

Perhaps I’ve just read too much Kafka for this to be a comfortable paragraph, but I’ll let you decide. From Politico, in “Health reform’s bureaucratic spawn“:

Don’t bother trying to count up the number of agencies, boards and commissions created under the new health care law. Estimating the number is “impossible,” a recent Congressional Research Service report says, and a true count “unknowable.”

The modern course of the law is administrative. In the end, the appropriate scope of the Congressional delegation of power falls to the Supreme Court’s “intelligible principle” doctrine and the acknowledged need for technical expertise in complex areas that require rules–such as Health Law and Health Law Finance. But that doesn’t make it all that much less scary.

The rest of the Politico article is worth a quick read. And if you’re an aspiring attorney, you might want to consider taking Administrative Law. And, of course, Health Law.

“The alternate approach to medical marijuana distribution,” an op-ed by Kate Greenwood featured in The Record

[Ed. Note: This op-ed piece was featured in The Record's Sunday Editorial Page and on North Jersey.com. It was written by Center for Health & Pharmaceutical Law & Policy Research Fellow and regular Health Reform Watch blogger, Kate Greenwood]

WE FEEL there is no question about it: The careful, legal distribution of medicinal marijuana to those in need is a good thing. The New Jersey Legislature agreed and passed legislation permitting distribution last January. Then-Gov. Jon Corzine signed the measure before leaving office.

But Governor Christie has requested a delay in its implementation, and a proposal to modify the system of distribution is cause for concern.

More than a year ago, Seton Hall Law’s Center for Health and Pharmaceutical Law and Policy distributed a position paper to New Jersey lawmakers urging passage of the marijuana measure, called the “New Jersey Compassionate Use Medical Marijuana Act.” The center did so citing the inclusion of “multiple measures designed to reduce the risk of abuse or diversion” and noting that “the medical literature supports the conclusion that smoked marijuana can provide relief to patients suffering from debilitating medical conditions for whom conventional treatments have failed.”

Implementation delayed

The act was to have taken effect this month, but, in response to a request from Christie, the Legislature pushed back the effective date to October.

As passed, the act provides that medical marijuana be grown and distributed by six not-for-profit “alternative treatment centers.”

But now, the New Jersey Council of Teaching Hospitals has proposed that the act be amended — before it is even implemented to provide that medical marijuana instead be grown by Rutgers University and distributed by the state’s teaching hospitals.

While hospitals are, as the Council of Teaching Hospitals points out, experienced dispensers of medicine, the act should not be rewritten to require them to dispense medical marijuana.

The passage of the act affects the rights and responsibilities of patients and providers of medical marijuana under New Jersey law; it does not change the fact that distribution and use of marijuana are illegal under federal law.

Although Attorney General Eric Holder has pledged not to prosecute patients and providers who comply with applicable state laws, and hospitals could thus dispense medical marijuana without fear of criminal prosecution, they would still be violating federal law.

Condition of participation

This is a problem because compliance with federal law is a condition of participation in the Medicaid and Medicare programs. Hospitals depend heavily on Medicaid and Medicare funding; the Compassionate Use Act’s alternative treatment centers would not.

Read More

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.

State Long-Term Care Partnership Programs

By Brian Seguin

Long-term care refers to end of life care where a person can no longer take care of themselves. These people require either the assistance of a trained professional, such as a home health aide, to help them care for themselves in their home, or they need to be housed in a nursing home and cared for there. Since Medicare does not cover long-term care, people who require it need to either pay for it themselves, or if they have almost no savings and get a low enough monthly income that they qualify, they can apply for Medicaid which does cover it. If someone pays for it themselves and winds up spending all of their savings and still needs care, they can then apply for Medicaid to cover it if their monthly income is under the threshold set by their state in order to qualify for the program.

In the early 1980’s, states began to worry that as the baby boomer generation got closer to retirement age and might start requiring long-term care, it could cause increases in their Medicaid expenditures and thus budget deficits. One possible solution forwarded for this impending problem, and eventually implemented by four states in 1993, was the idea of state long-term care partnership programs. Under these programs states would incentivize their citizens to purchase private health insurance to cover at least part of the long-term care they may eventually require and thus spare Medicaid from covering some of the costs. Insurance companies who participated in the programs had to meet certain regulations of what type of care was provided and had to report certain data back to the states so they could effectively monitor the impact the programs were having.

Proponents hoped these plans would cause people to buy their own long-term care insurance coverage and hopefully never need to turn to Medicaid to pay for it. They also hoped this would stop the perceived threat of people transferring their assets (savings) to family members early in order to appear qualified for Medicaid. Of the four original states, California and Connecticut incentivized their citizens by allowing them to disregard assets they had above the threshold allowed to qualify for Medicaid in the amount that the partnership plan had paid towards their long-term care. In other words if a person purchased a partnership plan and it paid out $200,000 towards their long-term care, that person would still qualify for Medicaid even if they had up to $200,000 in assets over the amount usually allowed to qualify. This was called the “dollar for dollar approach.” New York required citizens to purchase more comprehensive plans that had higher lifetime benefits, and if they did they could disregard all of their assets in determining if they qualified for Medicaid, known as the “total assets approach.” Indiana allowed a “dollar for dollar” disregard if the person purchased a plan covering less than four years of care and a “total asset” disregard if they purchased a plan covering more than four years.

Opponents of this idea worried that these public partnerships would inappropriately promote private plans with limited values, and that they could lead to increases in Medicaid expenditures by allowing wealthier people who would purchase private long-term care plans anyway keep their assets and now have access to Medicaid that they wouldn’t have otherwise had. As a result of these fears part of the Omnibus Budget Reconciliation Act of 1993 (OBRA) required any state that started a partnership program after 1993 to recover any disregarded assets of a deceased Medicaid recipient from their estate. Although this Federal law did not apply to the four states already operating partnership programs and did not ban other states from starting their own programs, it effectively eliminated any other states from trying to start their own programs by removing the incentives for citizens to join. This is because although a person could keep some of their assets while still alive, and still qualify for Medicaid, the state would now have to take those assets from their estate. So there was no longer any incentive for a person to purchase a partnership plan which they may never need, and thus shift some of the potential costs of long-term care on private insurers rather than Medicaid.

The Federal government finally decided to give long-term care partnership programs another chance in 2005 with the passage of the Deficit Reduction Act (DRA). Parts of that bill removed the estate recovery requirement of OBRA and allowed states (other than the original four who have continued their programs and are again not subject to this bill) to start their own partnership programs provided they use the “dollar for dollar” approach. Insurance companies participating in these new programs will have to be certified by the state, using new federal guidelines, and will have specific data reporting requirements. The “dollar for dollar” approach is mandated to avoid the grant of Medicaid benefits to those who do not need or deserve them. This approach only allows beneficiaries to keep the amount of assets they would have presumably spent for long-term care themselves and then qualified for Medicaid anyway, had their partnership plans not paid that amount. The federal government has finalized its rule of what data needs to be submitted by partnership insurers after consulting with the National Association of Insurance Companies, insurance companies who issue long-term care plans, the four original states with programs, and consumers who purchase long-term care plans. The data collected is meant to cost insurers as little as possible while still allowing the federal government to accurately track the effectiveness of these programs. While no states or private insurers are required to participate in these partnership programs, as of August 2008, 13 states (in addition to the original four) are now offering partnership plans and 12 more are in the process of implementing them.

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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Reform Rodeo: Medicaid; Self-insurance; EBM; Gene Patent Smackdown; eRx; Cool stuff

1. PPACA & Medicaid: Kaiser Health News’ Maggie Mertens discusses PPACA’s affect on Medicaid, specifically the legislation’s increase in Medicaid reimbursement.

2. PPACA & Self-Insurance: Professor Tim Jost breaks down how PPACA will influence self-insured plans.

3.  Doc vs Doc: Maggie Mahar profiles two feuding medical organizations: The Association of American Physicians and Surgeons, and the newer National Physicians Alliance.

4. Preventive Problems: The New York Times’ Duff Wilson reports on the brewing controversy of the FDA’s decision to permit broader marketing of AstraZeneca’s blockbuster statin Crestor.

5. On Evidence-based Surgery: David Gorski at Science-based Medicine has a tome-of-a-piece on surgery and evidence-based medicine.

6. Patent Pending: David Post at the Volokh Conspiracy discusses the recent ruling that invalidated (for now) the patenting of a gene thought to be associated with breast and ovarian cancer.

7. E-Prescribing: John Halamka discusses the trials and tribulations of e-prescribing controlled substances.

8. Just plain interesting:

a. Parkinson’s patients who can’t walk but can ride bikes. Wow.

b. Transcranial Magnetic Stimulation appears (at least in the lab) to influence moral decision making.

c. TED Talk: The Future of Medicine — Taking health care off the mainframe.

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.

Medicaid Cuts: Where’s the Outrage?

If Medicare services or provider rates were cut, or threatened to be cut to balance the budget, the firestorm would be epic.  Republicans would accuse Democrats suggesting such cuts of stealing from the elderly.  Democrats would accuse Republicans suggesting such cuts of trying to abolish Medicare.  AARP would express outrage, and if it didn’t do so loudly enough tea partiers would urge seniors to burn their AARP cards in an incongruous support of a government health care program.  So where’s the outrage when states faced with budget cuts look first to cut Medicare’s sister program, Medicaid?

A front page story in the New York Times on Tuesday describes cuts in Michigan’s Medicaid budget, resulting in the elimination of some services and reductions in provider fees.  As Medicaid fees were already absurdly low in Michigan, as in many states, the predictable response was that the pool of doctors available to Medicaid beneficiaries shrank even further.  Those lucky enough to find a doctor willing to take the low Medicaid reimbursement must be willing to travel long distances, and give up days of work to get necessary care for their sick children.  The Times described one such case:

Medicaid enrollees in Michigan’s midsection have grown accustomed to long journeys for care. This month, Shannon M. Brown of Winn skipped work to drive her 8-year-old son more than two hours for a five-minute consultation with Dr. Mukkamala. Her pediatrician could not find a specialist any closer who would take Medicaid, she said.

Later this month, she will take the predawn drive again so Dr. Mukkamala can remove her son’s tonsils and adenoids. “He’s going to have to sit in the car for three hours after his surgery,” Mrs. Brown said. “I’m not looking forward to that one.”

Those who can’t locate a participating physician either do without or wait for the condition to become emergent, at which time they seek more expensive hospital care.  How can this program be so dysfunctional?   The Kaiser Family Foundation, in a report posted last month, described the countercyclical nature of Medicaid’s finance structure:

During an economic downturn, unemployment rises and puts upward pressure on Medicaid. As individuals lose employer sponsored insurance and incomes decline, Medicaid enrollment and therefore spending increase. At the same time, revenue losses make it more difficult for states to pay their share of Medicaid spending increases. Specifically, a 1 percentage point increase in the national unemployment rate is estimated to result in 1 million more Medicaid and CHIP enrollees and an additional 1.1 million uninsured at the same time as state revenues are projected to fall by 3 to 4%.

So, states need to increase funding for Medicaid just when they are losing tax revenues and are facing pressures in other public service settings.  As KFF describes in the report, the problem this year was lessened somewhat by the addition of federal stimulus funding; the funding was apparently not enough to support the program in Michigan, and in any event will not persist nearly as long as states’ projected budget problems.

This is not a new problem.  It has often been noted that a health care system for poor people is a poor health system.  The reasons are, unfortunately, quite clear.  Medicare serves (mostly) the elderly of all income groups.  This is a politically powerful bloc: its members vote, and enough of them are financially and socially powerful to protect their turf.  Medicaid covers low-income people, including our lowest wage-earners, poor children, and people with permanent disabilities.  They have little social clout, by definition little money, and not much in the way of a lobby.  So, when times get hard, their programs are on the line.

That brings us to health reform.  The current bills rely heavily on Medicaid to bring coverage to the uninsured.  That is, as the above discussion makes clear, a risky proposition.  In its several forms, current reform bills have promised some increases, often temporary, to the federal share of states’ Medicaid costs.  And in a letter to Congressional leaders following a summit earlier this month, the President acknowledged the precariousness of the network of providers on whom we’ll rely to render that expansion more than a charade:

At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner.

That would be a good step.  So would increasing the federal share of Medicaid’s costs.  If the current fiscal crisis has shown us anything about our federalist system, it is that the federal government, with its ability to borrow,  is much better at responding to emergencies than are the states, with their obligations to balance budgets annually.  But ultimately, a program for poor people will always have political, and therefore fiscal problems.

For reform to stick, for expansion of coverage to the poor and near-poor to genuinely serve their health needs over time, we have to tend structurally to our funding system.  The achievement of expansion to near-universal coverage would be a statement of solidarity, proclaiming that we’re all in this together.  To make that stick, we have to be in our health care financing system together.  There will be a list of clean-up work and next steps if and when reform passes.  High on that list should be the repair of Medicaid’s shaky fiscal foundation, integrating the interests of Americans across class and income levels.  When they’re considering reductions in access to health care, legislators should be just as cautious about harming kids in Flint as they are about harming elders in Scarsdale.

While Medicaid Enrollment Rates Increase, States Face Financial Pressure to Decrease State Medicaid Spending

Last week, the Kaiser Family Foundation released a report indicating a large jump in state Medicaid enrollment from June 2008 to June 2009.  The report said that the 7.5 percent increase was the greatest one-year jump in enrollment rates ever, with over 3 million people joining the public health program funded jointly by the federal government and individual state governments.  The reason for the increase  is thought to be that because more people became unemployed due to the economic crash, more individuals turned to Medicaid for health coverage.  However, because the economic downturn meant less revenue entering into state budgets, state Medicaid programs have not been able to keep up with the rise in new enrollees.

During a convening of state governors at the White House this week, state officials will likely raise the issue of Medicaid spending. The issue is pressing in light of the impending funding cut when stimulus money from the American Recovery and Reinvestment Act of 2009 will expire in December of this year.  The governors will likely ask that the stimulus funding be continued until states can somehow make up for their large current budget deficits.  In addition to asking for more money, the governors will also likely discuss the feasibility of health care reform efforts.  With both House and Senate versions of health care reform proposing increases to state Medicaid programs to ensure the coverage of more uninsured individuals, the state governors would, understandably, like to know where the money for such expansion would come from.

The National Association of State Medicaid Directors estimates that states’ budgets will fall  short  $140 billion in the next fiscal year.  This means even less money for the likely further increase in Medicaid enrollment to come this year, as Medicaid enrollment generally lags behind unemployment.  To account for the deficit, many states are planning to reduce their Medicaid programs. USA Today finds that three categories of such reductions exist:

• California, Arizona and Virginia propose reducing who’s eligible. In Arizona, 310,000 people would lose coverage. California also wants to increase premiums.
• Michigan, Tennessee, Massachusetts and others propose eliminating benefits. Masachusetts’ elimination of restorative dental services would save $56 million, says Medicaid director Terry Dougherty.
• Texas, Pennsylvania, Louisiana and others propose cutting payments to hospitals, doctors or nursing homes. Several states are considering new taxes on hospitals as a way to avoid cutting these payments.

States that accepted stimulus money to expand their Medicaid programs in 2009 are restricted from any such cuts that would affect low-income enrollment.  However, if the stimulus funding is not extended, some states are planning on heightening eligibility requirements.  For other states, while decreasing hospital and doctor reimbursement seems like the worst possible option– given that many doctors have already stopped accepting  Medicaid patients due to what they deem to be an insufficient rate of reimbursement– many states’ officials find that the only other viable option they have is raising taxes.  Many state leaders refuse to increase taxes in fear of the political backlash come November.

Realizing the need for health care reform to help manage the burden of paying for health care, state governors have stated a desire to be part of the health care reform conversation.  Many have already expressed their dislike for individual mandates, which they believe will drive more individuals to state Medicaid programs.  For the most part, however, the governors want reform and they want it now, finding that they simply can’t afford to wait another year.

It is also worth noting that an underlying issue from these new numbers is whether the Medicaid program is actually a good prototype for expanding health care coverage.  Drew Altman, President and CEO of Kaiser, put in perspective Kaiser’s report as well as the concerns of public spending that were sparked by the Centers for Medicare and Medicaid Services’ projections for 2009-2019– which forecast that public spending on health care will surpass private spending.  He noted that while spending in public health insurance programs would increase, the cost-benefit would be better, since per capita costs on health care were lower in government-run programs than in private insurance programs.  According to Altman, such numbers did not undermine health reform efforts, but instead denoted “the need to control health care costs in the public and the private sectors alike.”

Cost, Choice, and Value

The Massachusetts Massacre has everyone stepping back a bit.  The President says that we should “coalesce around those elements of the package that people agree on,” but it is unclear just which elements those might be, given the extreme polarization that has defined the debate.  He suggests that points of agreement might center on insurance reform and cost containment, which are both important goals.  I’m skeptical that a sudden flowering of bipartisanship will allow such agreement, however.  Ezra Klein, on the other hand, has a paring proposal that goes in another direction, and reminds us of why we got into this in the first place: to extend coverage to the uninsured.  If we must narrow our focus, Klein says we should extend Medicare to those over 50, and expand Medicaid to those under 200% of poverty.  This would get lots of people insured, and could well be accomplished through budget reconciliation if no Congressional coalescing is to be had.

However the parsing, paring, and palavering goes, cost control is and will be at or near the health reform debate for years to come.  Two recent articles are worth a look for those interested in analysis of cost-containment strategies.

In his health care speech to Congress, the President suggested that one component of an effort to lower health care costs should be to empower a commission of “doctors and medical experts” to identify and,

encourage the adoption of  . . . common-sense best practices by doctors and medical professionals throughout the system. Wrapped up in that suggestion are notions of adhering to expert guidance in treatment decisions.

The stimulus bill passed in February pushed for scientific assessment of modes of care, providing $1.1 billion for comparative effectiveness research.  The current reform bills further emphasize CER, and would encourage the adoption of proven and promising treatments through professional education and some payment reform.  Harvard Medical School professor Jerome Groopman writes on evidence-based medicine in the latest New York Review of Books.   In his 2007 book, How Doctors Think, Groopman did a great job of explaining the complex and fraught process by which doctors make decisions, and he is fully on board with the notion that there is ample room for improvement.  His new article, however, cautions that the use of panels of experts with authority to impose or even recommend best practices is a dangerous way to go.

Groopman acknowledges the need for health policy folks to consider the bounded rationality of both doctor and patient.  He examines the Obama Administration’s policies on evidence-based practice by contrasting the views of two key advisors: Cass Sunstein, whose view of “libertarian paternalism” incline him to favor gentle “nudges” that may encourage certain behavior while leaving people free to reject the advice if they wish, and Peter Orszag, who is more inclined to employ forceful regulatory standards and financial incentives to achieve cost effective medical practice.  Groopman is compellingly  skeptical of expert claims of definitive standards on what “works” in health care, and cautions that such standards can result in harm to patients who fit uncomfortably into the hard categories defined in such best practices.

Groopman’s analysis seems incomplete for two closely intertwined reasons, and surely as a result of space constraints.  First, he suggests that the administration is faced with a stark choice between

aggressively pushing doctors and patients to do what the government defines as best, or [being] respectful of their own autonomy in making decisions.

Surely there is much middle ground between tying doctors’ hands and respecting complete clinical independence.  And it is not enough to say, as does Groopman, that

Most physicians seek data and views on treatments from peers and, as needed, specialists, and then present information and opinion to patients who ultimately decide.

Maybe so, but physicians are sometimes self-interested, and patients’ choices  are sometimes influenced by advertisements or other considerations disconnected from quality concerns.  For these and other reasons, spending decisions are no longer consigned to the doctor/patient dyad, but increasingly must accommodate the cost-containment interests of third party payers — government, employers, or insurers.

Second, Groopman describes two exclusive categories of procedures: “mechanical procedures” such as the  insertion an intravenous catheter (where he argues that enforcing standards to avoid infections is proper) and all other procedures, where the individual patient’s condition becomes relevant, and where he argues that coercing clinical choices is out of bounds.  It is not obvious that the universe of procedures is so divisible; it is even less clear that the dividing line between the two categories is uncontroversial.

Many questions remain.  Groopman is surely right that we must be cautious in enforcing categorical “best practices;” it is important to create public processes for vetting their accuracy and usefulness.  He is also surely right that public and private health finance rules must accommodate variation in medical needs, and must bend readily when a “best practice” is not suitable for a particular case.  But cost is relevant, and encouraging efficient practice can reduce the cost (and therefore the extent) of coverage.

So, how might a balance between financial constraints and patient protection work?  In a Health Affairs article posted  yesterday, Michael Chernew and coauthors examine the growing phenomenon of “value-based insurance” — a structuring of insurance co-payments responsive to the needs of people with chronic illness.  The co-payments imposed by insurers are, of course, intended to reduce demand for health care services (an Orszag, not a Sunstein tool, you might say).  Value based insurance reduces or eliminates these co-payments for services of “high clinical value.”  That is, if an insurer determines that it would rather not discourage utilization for a particular service, it reduces or removes the patient cost-sharing, presumably increasing usage, for cost as well as clinical reasons.  As the authors explain,

The belief that a value-based insurance program will lower health care spending rests on the recognition that the use of high-value health care services reduces the probability of adverse events related to chronic disease and that on a population basis, these events are much more costly than the services aimed at preventing them.

The authors found some evidence that such programs are cost effective, even in the narrow sense of reducing a plan’s health care expenditures.  They suggest that widening the economic lens to consider broader societal goals would only strengthen those conclusions.

The article acknowledges the reality of economic coercion in the clinical setting, and measures attempts to shape the tools of cost containment in a way that protects patients while maintaining cost containment.  One doesn’t have to accept the general wisdom of patient cost-sharing to value attempts to protect patients from untoward effects of its use.

The need to obtain “value” for health care spending and to take steps to restrain health inflation will persist however we come out of the current reform debate.  The discussion will benefit from both the erudite analysis of Groopman and others warning us away from answers that are too easy, and that of Chernew and others who can shine a light on the efficacy of particular cost containing measures.

What about the Kids? Health Care Reform and Children

During the reconciliation process of the House and Senate bills, one of the issues likely to be raised is what to do with the Children’s Health Insurance Program, commonly known as CHIP.  Under the Senate bill, federal financing for CHIP would be extended for another 2 years past the current expiration date of 2013.  The House bill, on the other hand, would allow CHIP to come to a close in 2013 since the bill plans to expand coverage for children through Medicaid and through the health insurance exchange– where subsidized health insurance would be available.  Whether or not these health reform initiatives will be able to meet the medical needs of children is a matter of debate.

CHIP is a “state-federal partnership” that was created in 1997 under the Balanced Budget Act to help insure those children who are from families that earned too much to qualify for Medicaid.  Similar to Medicaid, the federal government matches state dollars spent on CHIP (average of 57% federal responsibility for Medicaid spending, 70% for CHIP), but unlike Medicaid, the allocations to states for CHIP is capped.  CHIP also places greater discretion in  individual state’s hands regarding eligibility requirements.

One of the first bills Obama signed as President was the Children’s Health Insurance Program Reauthorization Act, or CHIPRA, in February 2009.  CHIPRA added $33 billion in federal funds to use towards providing coverage to 4.1 million children via Medicaid and CHIP through the year 2013.

In 2007, over 80% of eligible children nationwide participated in Medicaid or CHIP. Currently, 29 million children are enrolled in Medicaid, 7 million in CHIP. If CHIP were to be allowed to expire and absorbed (at least partially) by an expansion of Medicaid, however, the lower reimbursement rates for Medicaid could mean that those children transferred would not have access to as many health care providers as they would have had under CHIP.  While Medicaid might seem to be a sufficient substitute, it would still leave gaps that CHIP had filled if the reform does not include higher reimbursement rates for Medicaid and automatic enrollment provisions, as proposed by the House. In addition, as it stands, because of the relatively low reimbursement rates from Medicaid, many doctors have ceased to accept either new or all Medicaid patients.

The alternate option of funneling children to the insurance exchange does not seem promising either.  Many children currently enrolled in CHIP could become uninsured if their families cannot afford the plans offered in the exchange, which is a concern– as many families will still have a hard time meeting the premiums– even after the proposed subsidies from the government.  Senators Jay Rockefeller of West Virginia and Bob Casey of Pennsylvania have proposed to avoid some of these issues by expanding CHIP until 2019, a move that they say would benefit our country’s children by ensuring their access to health coverage.

In considering the options, it would behoove us to remember that “a stitch in time saves nine,” and that the regular health maintenance of children– much more likely for those children who have insurance– will pay dividends in the form of less of those costly visits to the emergency room and hospital stays. We would also be advised to remember that uninsured children in the hospital have bbeen shown to face a 60% greater risk of death than those children who have either private or government health insurance.

The Price of Sausage in Nebraska (and elsewhere)

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.” The quote, and a number of variants thereof, is most often attributed to Otto von Bismarck. The Boston Globe/A.P. does a nice job taking us through the cost– the spoils, if you will– of the votes requisite thus far to have taken the Senate’s Health Reform bill to its present status. The picture is not particularly pretty– with sizable benefits inuring to the holdout Senators and their constituents. The cost of 60 votes– filibuster-proof critical mass– is, one might say, the cost of doing business. But it is a risky business. By virtue of being so, the 60th vote,  Senator Ben Nelson of Nebraska, brought home the following pieces of bacon home for his constituents:

the federal government will pay the full cost of a proposed expansion of Medicaid, at an estimated cost of $100 million over 10 years; Blue Cross Blue Shield of Nebraska will be exempted from an annual fee on insurers; supplemental Medigap policies such as those sold by Mutual of Omaha are exempted from the annual fee on insurers; and a physician-owned hospital being built in Bellevue, Neb., could avoid a new ban on referrals from doctors who own such hospitals.

And what does the 23rd vote tell his constituents who will have to shoulder the costs of their state’s expansion of Medicaid?

The Boston Globe/A.P.  list is partial but telling. You can see it here.

For a more thorough look at the cost control and program implications of the bill, Professor Timothy Jost’s latest article in Health Affairs is a must read. In addition to a wealth of other information, Jost provides the following:

…the bill provides a cures acceleration program” to fund research for “high need cures” for which incentives in the commercial market are unlikely to result in timely development.  The Food and Drug Administration, the National Institutes of Health, and a new Cure Acceleration Network Board are supposed to work together to facilitate the discovery of such cures and to translate them from bench to bedside.  Grants can be made under the project of up to $15 million a year to eligible entities such as academic medical schools, biotech companies, and drug companies, who need only meet a $1 to $3 matching requirement.  $500 million is appropriated for this program for 2010.

This is all well and good and a great idea.  But nothing that I can see in the legislation gives the taxpayer any stake in this investment.  A drug or biotech company that in fact discovers a blockbuster drug or biologic through the federal government’s investment (perhaps for an off-label use) owes nothing in return.  Shouldn’t we the taxpayers get some return on  our investment, or at least the promise of reasonable prices?

Bismarck also is said to have said,  “Politics is the art of the possible.” To see that, you’ll want to read the rest of Professor Jost’s article.

Supporting Family Caregivers

Many of our hardest-working caregivers are not professionals, but parents, spouses, and children of people with serious chronic conditions, limited in their ability to engage in activities of daily living (ADLs) or instrumental activities of daily living (IADLs).  A new report from the National Alliance for Caregiving and the AARP opens up this informal, but absolutely essential, world of unpaid caregiving (h/t: Howard Gleckman ).

Some basic facts on the caregivers:

• They’re usually (66%) women;
• On average, they provide over 20 hours of care each week;
• They’re of all income levels, with an average income of about $60,000
• About one-third care for more than one person.

Some basic facts about those receiving the care:

• They’re mostly over 50 years of age, and 44% are over the age of 75;
• Most (51%) live in their own homes;
• Most (69%) require care due to long-term physical condition;
• 34% receive informal caregiving for 5 years or more.

In many cases, informal caregivers enable people with significant care needs to avoid nursing home or other institutional care.  Patients are better off, and so is the health budget: the avoided costs of expensive hospitalizations and nursing home care are enormous.   I have previously described the reform bills’ provisions that would support in-place care for people with chronic illness and disabilities.  Medicaid amendments would expand home care services, including such Cash & Counseling programs that give consumers substantial control over the mix of home services, and permit support for kinship caregiving.  And the Senate bill incorporates the Community Living Assistance Services and Supports Act (the “CLASS Act”), which provides for a new source of funding for personal assistance services for those not Medicaid-eligible.  A move supported by the insurance industry to strip it from the reform bill was narrowly defeated on December 4^th.

The insurance industry, of course, is vigorously trying to protect its own nascent long term care insurance business.  The long term care insurance industry has faced its share of horror stories about bureaucratic double-talk, denied claims, high prices, and limited benefits. The CLASS Act would provide an optional source of coverage, creating a voluntary program of member-supported public insurance for home care costs.  Like Medicaid’s Cash & Counseling system, it provides consumers with flexibility to choose the mix of supportive care when his or her health status triggers eligibility for coverage.

Why do we need such a program?  After all, there are many willing attorneys ready to help people spend down their assets — achieving “Medicaid impoverishment” — in order to qualify for Medicaid’s richer coverage.  Georgetown scholar Judy Feder was asked just that question for a recent Time Magazine article on the CLASS Act.  Her response was dead-on:

“Medicaid is invaluable,” says Judy Feder, a health policy expert at Georgetown University and a senior fellow at the Center for American Progress. “But it’s not insurance. It doesn’t protect you from catastrophe. It takes care of you after catastrophe.”

The long-term care financing mix in the Senate bill is far from perfect.  As a panel of experts surveyed by the Commonwealth Fund overwhelmingly agreed last year, the best solution would be to add a premium-financed long-term care component to Medicare, allowing the cost to be shared by government and consumers, without the trouble or expense of creating a new programmatic structure.  In the alternative, Congress could cobble together a better integrated “system” of long term/home care financing.  Such a system could virtually integrate a long-term care financing continuum, including Medicaid, Medicare, and voluntary insurance (such as that created by the CLASS Act) that could support consumers with chronic illness in the most appropriate setting for supportive care, reducing the discontinuities in coverage, perverse incentives for institutionalization, and counterproductive limits on services.  Either actual integration of all long term care services in Medicare, or the virtual integration (through smooth eligibility and service interfaces) in Medicare, Medicaid, and CLASS Act coverage could improve care and reduce costs.  But that won’t happen this year.

Instead, the best hope for expansion of access to personal assistance services will be the strengthening of Medicaid’s home care provisions and the creation of the CLASS Act program.  The overwhelming reform focus has been on very traditional “medical” insurance run through private, risk bearing insurance companies.  Only at the margins will the reform address the growing need for financing  appropriate health care for chronic illness.  Keeping the CLASS Act is a small step, but it at least acknowledges the obligation to support the personal assistance needs of those with serious chronic illnesses or disabilities, who are not (yet) impoverished, and who prefer to remain in their communities.  The CLASS Act will provide a new funding source for patient-directed personal assistance services.   Family caregivers will continue to devote themselves to their loved ones, but they need help.

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