Health Law and Policy Update
Want to know more about how current federal budget discussions can affect Colorado? Join us June 30 for Federal Budget Works, a three-hour training about the effects on health programs (Medicaid, Medicare) of such approaches as a balanced-budget amendment or a global spending cap.
This week's updates
- Udall and Bennet tell Obama to protect Medicaid from drastic budget cuts
- Exempla Lutheran Hospital physicians challenge Exempla change of control
- Division of Insurance fines Humana companies for violations of insurance laws
- Major California insurer rebates excess profit
- Release of Medicare claims data designed to show what's working
- Hearings continue on constitutionality of national health reform
- Converting Medicare to 'premium support' program would harm low-income seniors
Headlines of the week
Udall and Bennet tell Obama to protect Medicaid from drastic budget cuts
Forty-one members of the U.S. Senate including Colorado Senators Mark Udall and Michael Bennet have signed letters urging President Obama to reject drastic budget cut and block grant proposals for the Medicaid program. Udall and Bennet sent a joint letter to President Obama in May highlighting the important role Medicaid plays in an economic downturn and the lack of flexibility and fiscal burdens Colorado would face if proposals to cut Medicaid and turn it into a block grant were adopted.
Sen. Jay Rockefeller issued a letter this week with 37 signatories calling Medicaid a critical safety net during the recent economic recession and an economic engine that supports jobs in the health care industry. The letter also highlights the 68 million people, 40 percent of births, and 62 percent of long term care that Medicaid covers in the United States.
"Reckless proposals to slash Medicaid are attacks on our fellow Americans who can least afford to lose to health care," Rockefeller said in a news release.
The Colorado Center on Law and Policy several weeks ago released a paper detailing the significant problems that proposed Medicaid cuts pose for Colorado and the state's Medicaid beneficiaries.
Exempla Lutheran Hospital physicians challenge Exempla change of control
Seven Exempla Lutheran obstreticians/gynocologists have filed a petition with Colorado Attorney General John Suthers challenging the Exempla Lutheran change of control from a non-sectarian hospital to one controlled by Sisters of Charity of Leavenworth Health Systems, Inc. (SCLHS). The challenge contends the recent change of control violates the Colorado Hospital Conversion statute governing changes of control, nonprofit corporation law, and Colorado common law. The petitioners ask the Attorney General to hold a public hearing on whether the change in control is in the public interest and constitutes a change in the charitable purpose of Exempla Lutheran Hospital.
The petitioners charge the transaction is unlawful in several ways:
- The Community First Foundation (CFF-formerly the Lutheran Hospital Foundation) did not have the legal power to "sell" its interest in the hospital, or to receive an expected payment of $280 million from SCLHS.
- CFF does not have the power to divert from health care to general purposes other than health care any amounts received from SCLHS
- Exempla did not have the power to transfer its assets (totaling a net $758 million) to an out-of-state entity (SCLHS, based in Kansas) without approval from the attorney general, which it did not obtain. (Nor has the Attorney General approved the current transaction in other respects).
- The change in Exempla Lutheran's operations from a non-sectarian facility to a sectarian facility limiting reproductive counseling, certain procedures and other care under Catholic Ethical and Religious Directives (ERDs) constitutes a material change in the "charitable purposes to which the assets of the hospital have been dedicated."
The attorney general now has to decide, among other things, whether to hold a public hearing concerning the matter. As a transaction involving the movement of assets and money totaling more than $1 billion, materially changing the availability of health care and services in Jefferson County, and the conversion of charitable assets dedicated to specific charitable purposes, a public hearing is clearly warranted. The Colorado Center on Law and Policy urges all interested to contact the Office of the Attorney General, attn.: Geoff Blue, Esq. 7th Floor, 1525 Sherman St., Denver CO 80203 to request that the attorney general hold one or more public hearings in the 2011 petition concerning Exempla, Inc.
Division of Insurance fines Humana companies for violations of insurance laws
Two Humana companies that sell health insurance in Colorado must pay fines totaling $299,000 after state investigators found violations of state law such as using rates not filed with state authorities, the Colorado Division of Insurance announced Monday.
Other violations the Division of Insurance identified include missing or incorrect information provided in policy forms, which in some cases related to mandatory benefits coverage; failing to pay claims within time frames required by law, failing to use correct underwriting criteria for small groups, using incorrect utilization review procedures and failing to use correct procedures when terminating coverage.
The market conduct review conducted by the DOI was for the period between July 1, 2007 and June 30, 2009. The fines include $184,000 for Humana Insurance Company and $115,000 for Humana Health Plan, Inc., both headquartered in Louisville, Ky. The companies are required to correct the problems listed in the report. Policy holders who believe they have been harmed should contact the Division of Insurance.
Major California insurer rebates excess profit
Nonprofit health insurance company Blue Shield of California said Tuesday it would pay back $180 million in excess profits and hold future profits to 2 percent of revenue, various media outlets reported.
The move shows the effectiveness of cost-control measures in the Patient Protection and Affordable Care Act, said Health and Human Services Secretary Kathleen Sebelius.
"This is a great step forward in lowering costs for the people of California and we are pleased that Blue Shield is committed to providing better care at prices that better reflect underlying medical costs," Sebelius said in a news release. "While such voluntary efforts are great for Blue Shield's policyholders in California, today's announcement also reinforces the importance of the Affordable Care Act and rigorous State review of insurance rates."
Kaiser Health News compiled a roundup of news coverage.
The health reform law provides additional resources for states to review insurance rates and reject unreasonable increases. Colorado received a $1 million grant under that provision.
What's new
Release of Medicare claims data designed to show what's working
Medicare claims data would be made available to private analysts to help measure the quality and cost-effectiveness of health care under a proposed rule announced recently. Medicare data has historically not been available for the purpose of industry wide claims analysis; collection of this data is an important step towards the goal of improving quality and reducing health care costs.
"Performance reports that include Medicare data will result in higher quality and more cost effective care," said Donald M. Berwick, administrator of the Centers for Medicare and Medicaid, in an article posted on The Commonwealth Fund's website. "And making our health care system more transparent promotes competition and drives costs down."
The 60-day comment period on the rule begins June 8.
Hearings continue on constitutionality of national health reform
Oral argument was heard this week before a three-judge panel in the 11th Circuit Court of Appeals on the constitutionality of the Patient Protection and Affordable Care Act. The case, which originated in Florida, is the most watched of the challenges to the health reform law as plaintiffs include attorneys general and governors from 26 states, including Colorado, as well as the National Federation of Independent Businesses and others.
The lower court ruling being appealed was the broadest decision invalidating the law. District Judge Roger Vinson declared the individual mandate unconstitutional and invalidated the entire act, saying the mandate was integral to the structure of law. According to news reports, the judges on the 11th Circuit panel focused attention on the individual mandate. One judge was particularly interested in an argument that had been rejected by the lower court related to the law's requirement that states that participate in Medicaid expand that program. One judge focused on issues of severability, whether the provisions of the act could stand alone if the individual mandate were found unconstitutional.
The 6th Circuit and 4th Courts of Appeals heard arguments in other cases challenging the law on June 1 and in May. The courts could take months to issue decisions. Since each case was heard by a three-judge appellate panel, the cases could go next to the entire circuit court for a hearing or move directly to the U.S. Supreme Court. Experts agree the U.S. Supreme Court will make the ultimate decision.
More news coverage of the arguments is available at the blog of the American Constitution Society and The New York Times.
Advancing the debate
Converting Medicare to 'premium support' program would harm low-income seniors
Lower-income beneficiaries could lose health coverage altogether under a proposal to convert Medicare to a "premium support" program that passed the U.S. House in April, according to a new analysis from the Kaiser Family Foundation.
The analysis examines how the government's contributions would be set and adjusted over time; whether and how those payments would vary based on beneficiaries' age, income, health status and geographic location, and the extent to which enrollees' costs could vary accordingly; and other issues.
The proposal is a key feature of a federal budget resolution sponsored by House Budget Committee Chairman Paul Ryan, R-Wis. Rather than the open-ended commitment to provide health care for seniors that exists under the current Medicare program, a premium-support approach would limit government spending and shift more of the costs to beneficiaries.
"These amounts, which will likely vary depending on the age of the beneficiaries and where they live, could be significantly higher than beneficiaries would pay under current law," the paper says. "Thus, some lower-income beneficiaries may become uninsured while some higher-income beneficiaries may elect to self-insure or seek alternative insurance options, if any, in the private insurance market."
Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.
Health Care Director
Elisabeth Arenales
Health Care Attorney
Adela Flores-Brennan
Special Counsel
Ed Kahn
Communications Director
Perry Swanson
Released June 10, 2011