Federal Courts Rule in Challenges to PPACA

The U.S. Court of Appeals for the District of Columbia Circuit rendered an opinion in Sissel v. HHS which found that the individual mandate under the PPACA was not an improper exercise of congressional power under the Constitution’s origination clause, despite the fact that the final bill language was installed when the Senate struck the House-passed bill language and inserted its own version. The court reasoned that the PPACA is legislation that only incidentally raises revenue and therefore is not a “revenue raising” measure subject to the origination clause mandate that such bills originate in the House. In another action, the plaintiffs in King v. Burwell filed a petition in the U.S. Supreme Court for a review of the adverse decision they received in the U.S. Court of Appeals for the Fourth Circuit which found that the IRS acted within its power to interpret the health law as allowing for individual tax credits to be made available to individuals enrolled under HealthCare.gov in states that did not set up their own exchanges. In a separate case, the U.S. Court of Appeals for the District of Columbia Circuit upheld a challenge to the individual tax credit being available in non-electing states. While there appears to be a split in the two courts, another outcome could be forthcoming if the Department of Justice’s petition for an en banc review in the DC Circuit is granted.

Medicare Part A, B and D Reports

The trustees’ report of the Medicare Hospital Insurance (Part A) Trust Fund contains a finding that the program’s reserve will be depleted in 2030 which is four years longer than estimated earlier, although outgo will exceed income beginning in 2023. The Federal Supplementary Medical Insurance (Part B) Trust Fund also contains a projection that Part B beneficiary premiums will remain the same in 2015 as for 2014. Of note, the report assumes that this will be achieved under the assumption that Congress will pass another temporary fix for the sustainable growth rate (SGR) formula under the Medicare physician payment methodology. In another action, CMS released 2015 estimates for Medicare Part D premiums which are projected to increase by about $1 to $32 per month. The trustees and CMS indicated that the improved cost projections are based on the historically low growth rate of health care costs currently being experienced.

Senate Aging Committee Hears Critics of Recovery Audit Contractor Program

At a Senate Special Committee on Aging hearing, the chief of hospital medicine of the University of Wisconsin School of Medicine and Public Health testified that the level of problems found under the current Medicare Recovery Audit Contractor (RAC) program is cause for a major reform of the system. She said that the RAC program has led to overpayment determinations that have routinely been overturned on appeal. With the rise in the percentage of hospital patients placed in observation status and not admitted as inpatients, thus raising the costs for beneficiaries, she said that any change in policy regarding observation status must be accompanied by reform of the RAC program.

GAO Critical of CMS Medicaid Oversight

At a House Oversight Subcommittee on Energy Policy, Health Care and Entitlements hearing, the HHS Office of Inspector General (OIG) testified that states need to improve their oversight of Medicaid providers and that CMS also needs to improve its oversight of states to detect and prevent efforts to inappropriately shift costs to the federal government. The GAO unveiled a report and an agency spokesperson testified that states have been relying on inappropriate methods of financing their Medicaid programs and have increasingly been using funds from individual providers and local governments to finance their programs. GAO said the Medicaid program remains on its list of high-risk federal programs despite making recommendations that CMS improve its auditing, data collection and guidance to states. The Director of the CMS Center for Medicaid and CHIP responded that the agency has been taking steps to implement GAO’s recommendations.

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