On Friday, December 14, 2018, a federal district court judge in Texas issued a widely anticipated opinion that struck down the entire Patient Protection and Affordable Care Act (“ACA”) as unconstitutional. The judge ruled in favor of the plaintiffs by determining that the “individual mandate”[1] is no longer a tax and is therefore an unconstitutional exercise of congressional authority. The judge also found that the individual mandate was inseverable from the rest of the ACA, which makes the entire ACA, not just the guaranteed issue and community rating provisions, unconstitutional.
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Affordable Care Act (ACA)
Midterms Bring New Focus to Healthcare
Tuesday’s midterm elections showed that healthcare is now a top issue among voters, according to exit polls. In an NBC News poll, healthcare was the top issue for a plurality of voters, ahead of the economy, immigration, and gun policy. [1] As voters made their voices heard, they also helped to solidify the position of the Affordable Care Act (“ACA”) nationwide. While the country waits for final vote counts to be tallied, three key takeaways have emerged:
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CMS Proposes Massive Changes to ACO Program – Pushing Providers to Accept Downside Risk
On Thursday, August 9, 2018, the Centers for Medicare & Medicaid Services (“CMS”) published a Proposed Rule (the “Proposed Rule”)[1] regarding the Medicare Shared Savings Program (“MSSP” ) for Accountable Care Organizations (“ACOs”). The Proposed Rule would require ACOs to accept downside risk or shared losses sooner than under the current MSSP and would promote entities that have shown the greatest cost savings since implementation of the MSSP in 2012. Although not discussed in this article, the Proposed Rule also contains refinements to the methodology concerning ACO benchmarks and a modification to the current approach to risk adjustments, as well as changes to the MSSP’s claims-based assignment methodology and allowing beneficiaries to voluntarily align to ACOs in which their designated primary clinician is an ACO professional.
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The Risk Corridor is Closed: Insurers Seek Recourse in the Federal Circuit
On July 30, 2018, two insurers – Moda Health Plan, Inc. (“Moda”) and Land of Lincoln Mutual Health Insurance Company – petitioned the U.S. Court of Appeals for the Federal Circuit to reconsider the Court’s June 14, 2018 ruling in which the Court held that the U.S. Department of Health and Human Services (“HHS”) is not responsible for making past-due “risk corridor payments” to insurance companies as required by Section 1342 of the Patient Protection and Affordable Care Act (“ACA”) (the “June Ruling”).
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The Trump Administration Allows for Longer “Short-Term” Health Insurance Policies, but Coverage Stays the Same
On Wednesday, August 1, 2018, the Trump Administration issued the Short-Term, Limited-Duration Insurance Final Rule (the “Final Rule”), expanding the coverage length of “short-term, limited-duration insurance” policies under the Patient Protection and Affordable Care Act (“ACA”).
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No Longer in Suspense: CMS Issues Final Rule Announcing that Risk Adjustment Program Transfers for 2017 will be Distributed in September
The Final Rule. In a Final Rule posted by CMS last Tuesday, July 24, 2018, CMS announced that $10.4 billion in “risk adjustment transfers” (“Risk Transfers”) for benefit year 2017 (as calculated pursuant to the Affordable Care Act’s Risk Adjustment Program (the “Risk Program”)) would be distributed to eligible exchange-participating insurers in September, 2018. The Final Rule adopts the previously published methodology for the 2017 benefit year with additional explanation. CMS says that it intends to issue a new proposed rule on the risk adjustment methodology for the 2018 benefit year.
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Following Repeal of the Individual Mandate, Twenty States Challenge the Affordable Care Act
On February 26, 2018, twenty states (the “Plaintiffs”) jointly filed a lawsuit[1] in the U.S. District Court for the Northern District of Texas requesting that the court strike down the Patient Protection and Affordable Care Act (“ACA”), as amended by the Tax Cuts and Jobs Act of 2017 (the “TCJA”), as unconstitutional. The Plaintiffs’ suit gained support from the White House last week, when Attorney General Jeff Sessions delivered a letter to House Speaker Paul Ryan on June 7, 2018 (the “Letter”), indicating that the Attorney General’s Office, with approval from President Trump, will not defend the constitutionality of the individual mandate – 26 U.S.C. 5000(A)(a) – and will argue that “certain provisions” of the ACA are inseverable from that provision.[2] The Letter indicates that this is “a rare case where the proper course is to forgo defense” of the individual mandate, reasoning that the Justice Department has declined to defend statutes in the past when the President has concluded that the statute is unconstitutional and clearly indicated that it should not be defended.
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CMS Proposes “Wind Down” Plan for Federal Exchanges
Despite the Trump Administration’s unsuccessful attempts to fully repeal and replace the Affordable Care Act (the “ACA”), the Administration has continued to target the ACA. In the Administration’s latest salvo, the Centers for Medicare & Medicaid Services (“CMS”) announced in its Fiscal Year 2019 Performance Budget (the “Budget”)[1] – as released by the federal Office of Management and Budget on February 12, 2018 and as discussed in greater detail in CMS’s Justification of Estimates for Appropriations Committee released last week – a proposal to “wind down” its financial support for the federal health insurance exchanges. Specifically, the Budget explains that if Congress repeals the ACA, CMS will withdraw its support of the federal exchanges by plan year 2020.
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Have the Reports of the Affordable Care Act’s Death Been Greatly Exaggerated?
The December 2017 Tax Reform Bill and the Repeal of the ACA’s Individual Mandate
The tax reform bill signed into law by President Trump on December 22, 2017, notably includes the repeal of the Affordable Care Act’s (ACA’s) individual mandate penalty. The individual mandate, which requires most Americans to maintain a basic level of health insurance coverage or pay a penalty to the federal government, had already endured multiple constitutional challenges and scrutiny by political pundits by the time it came into effect in 2014. The offering of affordable insurance coverage through the ACA’s healthcare exchanges was supported by the individual mandate, which was intended to ensure that enough healthy people would participate in insurance pools to balance out the sick, who cost more to insure.
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President Trump Signs Tax Reform Bill Into Law
Today, President Trump signed into law a sweeping tax reform bill passed by the House and the Senate on Wednesday that will materially affect virtually every sector in the economy, including, perhaps to a greater degree than others, the healthcare sector. Between the bill’s repeal of the Affordable Care Act’s individual mandate penalty tax and other pertinent provisions, we might reasonably expect to see:
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