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Four Supreme Court Decisions in 10 Days reset U.S. Healthcare
June 27, 2022
Four decisions by the Supreme Court in the last 10 days will fundamentally change U.S. healthcare for decades to come:
June 15, 2022: American Hospital Association v Becerra (20-1114) In a unanimous (9-0) decision, the Court found that a reading of the statutory language makes clear that without surveying hospitals as to their drug acquisition costs, HHS may not change drug reimbursement rates for a subset of hospitals. The court noted that this “protects all hospitals by imposing an important procedural prerequisite—namely, a survey of hospitals’ acquisition costs for prescription drugs—before HHS may target particular groups of hospitals for lower reimbursement rates.”
The issue going forward: under what authority and by what mechanisms will HHS and its agencies with responsibility for provider payments (CMS, FDA, IHS, HRSA, et al) modify methodologies to shift payments to its priorities or direct resources to programs it deems appropriate? And the practical implication for providers (hospitals, federal clinics, public health providers, physicians, post-acute and long-term care providers et al) is budgeting for long-term strategic initiatives if HHS is locked into funding and reimbursement methodologies tethered to old business models and faulty assumptions about how care CAN be delivered, by whom and where.
June 21, 2022: Marietta Memorial Hospital Employee Health Benefit Plan et al. V. Davita inc. Et al (20-1641 In a 7-2 decision, SCOTUS said employer health plans can make all dialysis providers out-of-network opening the door for other employers to make similar changes to their health coverage and encourage workers who have kidney failure to drop their private plans and enroll in Medicare. Writing for the majority, Justice Brett Kavanaugh explained that “If Congress wanted to mandate that group health plans provide particular benefits, or to require that group health plans ensure parity between different kinds of benefits, Congress knew how to write such a law. It did not do so in this statute.”
Background: Currently, if a worker has kidney failure and health insurance through a job, employers must cover that person for 33 months — an initial three-month waiting period as the patient qualifies for Medicare and then the next 30 months. During that time, Medicare fills some coverage holes as a backup to the employer, but after that time lapses, Medicare primarily pays the bills, according to the
Medicare Secondary Payer Act. Current law
says employers “may not differentiate in the benefits it provides between individuals who have ESRD and others enrolled in the plan, on the basis of the existence of ESRD, or the need for renal dialysis, or in any other manner.” Thus, companies can’t design insurance plans that treat people with kidney failure differently than others.
The issue going forward: with employers free to design insurance benefits that encourage sicker/more at-risk workers to enroll in public insurance programs including Medicare, might other costly conditions be added to ESRD as carve-outs that enable employers to limit their financial risk while maintaining the tax deduction for the benefits they provide? Might high risk pregnancies, severe mental health conditions, and others be added to off-load health costs and care management to Medicare/Medicaid? What is the long-term implication for employer sponsored coverage if it’s geared primarily to healthier workers only? And is Medicare funding adequate to add these populations since its solvency is already in question? Should employers and healthy workers pay higher payroll taxes to accommodate this shift?
June 24: Becerra v. Empire Health Foundation (20-1312) Becerra v. Empire Health Foundation concerns the U.S. Department of Health and Human Services' (HHS) 2005 rule that changed how it calculated the annual reimbursement rate Medicare pays to hospitals serving low-income patients. More specifically, the Empire Health Foundation is challenging HHS' use of the phrase "entitled to" instead of "eligible to" when calculating these payments. In a 5-4 decision, SCOTUS held that “those individuals “entitled to [Medicare Part A] benefits” are all those qualifying for the program, regardless of whether they receive Medicare payments for part or all of a hospital stay.” The majority opinion held that “everyone who qualifies for Medicare benefits in the Medicare fraction—and no one who qualifies for those benefits in the Medicaid fraction—accords with the statute’s attempt to capture, through two separate measurements, two different segments of a hospital’s low-income patient population.”
The issue going forward: calculating payments using this expanded definition for the Medicare fraction will expand payments to Disproportionate Share Hospitals and possibly lead to lower payments to non-DSH hospitals.
June 24, 2022: Dobbs v. Jackson Women’s Health Organization (19-1392) By a vote of 6-3, the Court sided with the Mississippi law that bans abortion after 15 weeks of pregnancy. It concluded “The Constitution does not confer a right to abortion; Roe v. Wade, 410 U. S. 113, and Planned Parenthood of Southeastern Pa. v. Casey, 505 U. S. 833, are overruled; the authority to regulate abortion is returned to the people and their elected representatives.” Justice Alito, author of the majority opinion, added “The Constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision. “This ruling reversed the 1992 companion precedent known as Planned Parenthood v. Casey, which held that states can’t impose significant restrictions on abortion before a fetus becomes viable for life outside the womb.
And in a separate 5-4 vote, the court overturned Roe v. Wade, with Chief Justice Roberts switching sides arguing the court should not have decided the broader question of whether the Constitution protects abortion at all (Roe v Wade 1973).
The immediate issue is this: how will regulations be set in the 26 states that are likely to ban/limit abortions including 13 that have
"trigger laws" making abortion illegal almost immediately. Regulations outlining access to abortion pills from “certified providers”, access to out-of-state abortion services, the role of telemedicine advisory services and criminality risks for providers and enablers are immediate concerns. Lawmakers in at least 20 states have already proposed restrictions or bans on abortion pills (mifepristone and misoprostol) approved by the FDA for ending pregnancies up to 11 weeks and Attorney General Merrick Garland said: "States may not ban Mifepristone based on disagreement with the FDA’s expert judgment." Thus, access to abortion pills may result in a jurisdictional stand-off between the FDA’s approval process and individual state restrictions.
The longer-term impact is more sobering: how will U.S. infant mortality be impacted—already the highest in industrialized nations. How will employers adjust benefits and assess liability risks associated with coverage for their workforce, especially women of childbearing age? How will abortion opponents address the needs of moms and newborns most directly impacted by restrictions? And so on.
My take:
In the near term, these rulings assure that healthcare, especially abortion-rights, will be prominent in Campaign 2022 and in FY 2023 budget planning for Medicare in DC and Medicaid in states. They’ll prompt every employer to revisit the design of their health benefits programs in light of the potential to off-load costs for ESRD workers. They’ll prompt hospitals that do not benefit from DSH reimbursement method changes to find additional areas for operating cost reductions in anticipation of cuts. And they require every state to prepare for disruption in providing abortion services, whether restricted or otherwise.
The longer-term impact is perhaps more impactful than these short-term effects. Supreme Court Justices are appointed for life. The court’s current composition is conservative-leaning and 3 of the 5 are in their fifties: Thomas (74), Alito (72), Gorsuch (55), Kavanaugh (57) and Barrett (50). With that, a number of challenges to the status quo might work their way through this high court’s conservative filter that’s inclined toward individual freedoms, state’s rights, free market capitalism and competition.
It opens the door for big questions that are likely to work their way through in the courts and potentially be decided by SCOTUS:
- Is access to healthcare in America a right or privilege? What do ‘healthcare, access and affordability' mean?
- When does “life” begin? When does a fetus become a person? at 24 weeks per Roe v. Wade? At 15 weeks per Mississippi?
- Is a state’s abortion policy discriminatory against low-income women?
- Is an employer obligated to provide insurance coverage to all employees? Under what terms may costs be shared?
- Is a private hospital obligated to provide a community benefit? services to low-income citizens?
- What role should personal accountability (health habits) play in eligibility for insurance coverage, and should less accountable persons pay more?
- Per Justice Thomas suggestion, which “enumerated rights” have constitutional protections and which don’t? contraception? same-sex marriage?
- And many others.
While Dobbs v. Jackson Women’s Health Organization has garnered the lion’s share of media attention,
the four decisions taken together change the immediate and longer-term future of U.S. healthcare.
It’s a new day.
Paul