July 12, 2012

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Health Care Reform

Affordable Care Act largely survives Supreme Court scutiny


Insurance Execs Tell Finance SGR-Fix Shouls Drive Delivery Reform

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Health Care Reform

Affordable Care Act largely survives Supreme Court scutiny

The Supreme Court largely upheld the Patient Protection and Affordable Care Act (ACA), including the mandate that individuals must purchase health insurance, calling the penalty a tax. The individual mandate was considered the most crucial part of the overall healthcare legislation because striking it down would have jeopardized the ability of insurers to comply with other, more popular elements of the law without drastically raising premiums.

The court reviewed four questions: whether it was within Congress’s constitutional powers to impose the individual mandate to purchase health insurance; whether all or any additional parts of the law must be struck down if the mandate is rejected; whether an expansion of Medicaid was unduly coercive on the states; and whether all of those questions can even be reviewed before the mandate takes effect.

The high court rejected the argument, advanced by the Obama administration, that the individual mandate was constitutional under the commerce clause of the Constitution. But Chief Justice John Roberts joined the court’s four liberal justices — Ruth Bader Ginsburg, Sonia Sotomayor, Stephen Breyer and Elena Kagan — in ruling that a penalty for refusing to buy health insurance amounts to a tax and thus is permitted.

Even as the Supreme Court upheld the central component of the ACA, the court modified another key provision of the law regarding Medicaid expansion. The high court ruled that the expansion is constitutional so long as the federal government does not withhold all of states’ Medicaid funding for not complying with the expansion, though the court also said that states could lose new funds if they didn’t comply with the law’s Medicaid expansion requirements.

The Patient Protection and Affordable Care Act is set to fully take effect in 2014.


Insurance Execs Tell Finance SGR-Fix Shouls Drive Delivery Reform

Congress should use the reform of the Medicare physician pay formula to change the delivery of care, a group of commercial insurance executives told the Senate Finance Committee at a roundtable on June 14th on reforming the Sustainable Growth Rate (SGR) formula. The witnesses did not give concrete recommendations for changing the SGR formula and discussed their views that Medicare should move away from a fee-for-service system.

The SGR sets rates for individual doctors based on the actions of physicians nationally and as a result doctors have no incentive to be efficient, witnesses said. The witnesses said Medicare should pay doctors on the group level, and the performance of these groups would determine what they are paid, a description that fits accountable care organizations (ACOs) that the Centers for Medicare and Medicaid Services (CMS) is already testing.

Those delivery reforms should start with improving quality, lead to lowering cost and give doctors incentives to follow up with patients in their homes, the witnesses added. Patients often do not comply with their treatment regimens, they said.

All the witnesses described in general terms an approach that would give doctors incentives to organize into groups of providers with whom they want to be on the same team. The insurance company gives those groups long-term benchmarks for quality and total cost of care, and when physicians meet those goals, they’re paid bonuses.

This was the second roundtable the Senate Finance Committee has held on SGR. The first included testimony from former CMS administrators.

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