The Supreme Court’s Affordable Care Act (ACA) Decision Presentation for the Association of Community Cancer Centers Sheree R. Kanner, Dominic F. Perella, Beth Roberts, and Beth Halpern July 12, 2012 Washington, DC Affordable Care Act Upheld, June 28, 2012 • Strong victory for health reform, but open questions about – ACA’s Medicaid expansion – Federal government’s power in federal-state programs • Medicaid decision was a surprise to just about everyone – What states and CMS will do is unclear – May spawn additional litigation from states and beneficiary advocates • Action will shift to Congress, states, and the fall election www.hoganlovells.com 2 Issues Before the Supreme Court • At the core of the Court’s decision were three issues: 1. Timing of challenge 2. Individual mandate 3. Medicaid expansion www.hoganlovells.com 3 Issues Before the Supreme Court – Anti-Injunction Act • Question 1: Was the individual mandate — which requires almost all Americans to obtain health insurance — a “tax” that could not be challenged until it was collected because of the federal AntiInjunction Act? • Answer: No. Mandate is a “tax” for constitutional purposes but not for purposes of the Anti-Injunction Act • Case can proceed to be decided www.hoganlovells.com 4 Issues Before the Supreme Court – Individual Mandate • Question 2: Could the mandate to purchase health insurance be upheld under Congress’ power to regulate interstate commerce or Congress’ power to collect taxes? • Answer: Yes – Four Justices would have upheld the mandate under the Constitution’s Commerce Clause, but four are not enough – Other five Justices looked for a limiting principle under the Commerce Clause, but could not find one – Chief Justice Roberts played the key role, upholding the mandate as a tax and joining the other four Justices who would have upheld it under the Commerce Clause and as a tax www.hoganlovells.com 5 Issues Before the Supreme Court – Medicaid Expansion • Question 3: Was the ACA’s expansion of Medicaid — which required states to expand the Medicaid program to all individuals under a certain income threshold and threatened withdrawal of all Medicaid funds if the states refused — so coercive as to exceed Congress’ power to spend federal money? • Answer: Yes, but states have the option to expand their Medicaid programs www.hoganlovells.com 6 Implications Beyond Health Care • Courts and policymakers will have to assess how the Court’s holdings regarding the Commerce Clause, Taxing Clause, and Spending Clause constrain Congress’ power to make or amend laws in the future www.hoganlovells.com 7 Implementation of Health Reform • Goals of the ACA: – – – – Expand insurance coverage Improve the quality of coverage Control growth in health care costs Encourage more appropriate use of health care resources www.hoganlovells.com 8 Health Reform for Cancer Patients • Expanding access to health insurance is important for cancer patients – • • According to a 2006 survey of households with a member who had been diagnosed with cancer within the last 5 years: • 7% are currently uninsured • 5% currently use Medicaid as their main source of health insurance coverage • 13% experienced a lapse in coverage at some point during or since their cancer treatment Patients would benefit from improved coverage under their insurance policies Initiatives to encourage appropriate use of resources could affect patients’ diagnosis and treatment Source: USA Today/Kaiser Family Foundation/Harvard School of Public Health, National Survey of Households Affected by Cancer, http://www.kff.org/kaiserpolls/pomr112006pkg.cfm, data collected in 2006. www.hoganlovells.com 9 Health Reform Implementation Timeline • Provisions by year – – – – – – – – 2010: 26 total, 26 in effect or in process 2011: 20 total, 17 in effect or in process 2012: 11 total, 10 in effect or in process 2013: 13 total, 5 in effect or in process 2014: 20 total, 2 in effect or in process 2015: 1 total, 0 in effect or in process 2016: 1 total, 0 in effect or in process 2018: 1 total, 0 in effect or in process www.hoganlovells.com 10 2010 – 26 Total Provisions, 26 in Effect or in Process • Review of health plan premium increases • Changes in Medicare provider rates • Qualifying therapeutic discovery project credit • Medicaid and CHIP Payment Advisory Commission • Comparative effectiveness research (PCORI)* • Prevention and public health fund • Medicare beneficiary drug rebate • Small business tax credits • Medicaid drug rebate • Coordinating care for dual eligibles • Generic biologic drugs* • New requirements on non-profit hospitals • Optional Medicaid coverage for childless adults* * Particularly important to cancer care www.hoganlovells.com 11 2010 (cont’d) • Reinsurance program for retiree coverage • Pre-existing condition insurance plan* • New prevention council • Consumer website • Tax on indoor tanning services • Expansion of 340B drug discount program* • Adult dependent coverage to age 26 • Consumer protections in insurance* • Insurance plan appeals process • Coverage of preventive benefits* • Health centers and the National Health Service Corps • Health Care Workforce Commission • Medicaid Community-Based Services * Particularly important to cancer care www.hoganlovells.com 12 2011 – 20 Total Provisions, 17 in Effect or in Process • • Minimum Medical Loss Ratio for insurers Closing the Medicare drug coverage gap with manufacturer discounts on brand name drugs and phase-in of subsidies for generic drugs* • Medicare payments for primary care • Medicare prevention benefits* • Center for Medicare and Medicaid Innovation* • Medicare premiums for higher-income beneficiaries • Medicare Advantage payment changes • Medicaid health homes • Chronic disease prevention in Medicaid • National Quality Strategy • Changes to tax-free savings accounts • Grants to establish wellness programs * Particularly important to cancer care www.hoganlovells.com 13 2011 (cont’d) • • • • • • • • Teaching health centers Medical malpractice grants Funding for health insurance exchanges Nutritional labeling Medicaid payments for hospital-acquired infections Graduate medical education Medicare Independent Payment Advisory Board Medicaid long-term care services www.hoganlovells.com 14 2012 – 11 Total Provisions, 10 in Effect or in Process • • • • • • • • • • • Accountable Care Organizations in Medicare Uniform coverage summaries for consumers Medicare Advantage plan payments Medicare Independence at Home demonstration Medicare provider payment changes Fraud and abuse prevention Annual fees on the pharmaceutical industry Medicaid payment demonstration projects Data collection to reduce health care disparities Medicare Value-Based purchasing Reduced Medicare payments for hospital readmissions www.hoganlovells.com 15 2013 – 13 Total Provisions, 5 in Effect or in Process • • State notification regarding exchanges Closing the Medicare drug coverage gap with subsidies for brand name drugs* • Medicare bundled payment pilot program • Medicaid coverage of preventive services* • Medicaid payments for primary care • Itemized deductions for medical expenses • Flexible spending account limits • Medicare tax increase • Employer retiree coverage subsidy • Tax on medical devices • Financial disclosure • CO-OP health insurance plans * Particularly important to cancer care www.hoganlovells.com 16 2014 – 20 Total Provisions, 2 in Effect or in Process • Expanded Medicaid coverage* • Presumptive eligibility for Medicaid • Individual requirement to have health insurance* • Health insurance exchanges* • Health insurance premium and cost sharing subsidies* • Guaranteed availability of insurance* • No annual limits on coverage* • Essential health benefits* • Coverage of routine patient costs in clinical trials* • Multi-state health plans • Temporary reinsurance program for health plans • Basic health plan • Employer requirements * Particularly important to cancer care www.hoganlovells.com 17 2014 (cont’d) • • • • • • • Medicare Advantage plan loss ratios Wellness programs in insurance Fees on health insurance sector Medicare Independent Payment Advisory Board report Medicare Disproportionate Share Hospital payments Medicaid Disproportionate Share Hospital payments Medicare Payments for Hospital-Acquired Infections www.hoganlovells.com 18 2015 – 1 Total Provision, 0 in Effect or in Process • Increase federal match for CHIP www.hoganlovells.com 19 2016 – 1 Total Provision, 0 in Effect or in Process • Health Care Choice Compacts www.hoganlovells.com 20 2018 – 1 Total Provision, 0 in Effect or in Process • Tax on high-cost insurance www.hoganlovells.com 21 What happens next to the ACA? • Pre-election – CMS likely to issue guidance to hasten and encourage establishment of health exchanges, expansion of Medicaid, and general implementation of ACA – Obama Administration desire to avoid antagonizing voters through ACA implementation will result in less direct pressure on states/more conciliatory approach – Full speed ahead on non-Medicaid/state-related ACA implementation to get as far as possible in case Obama loses – Some Republican Governors may refuse to implement ACA www.hoganlovells.com 22 What happens next to the ACA? (cont’d) • Post-election – If Obama is re-elected • • and Republicans win Senate, implementation will slow and funding is at risk and Democrats keep Senate, implementation proceeds apace with House oversight (assuming Republicans keep House) – If Romney is elected • • and Republicans win Senate, push for ACA repeal and Democrats keep Senate, push to amend ACA, implementation stalls and funding is at risk • Sequestration and any alternative legislation to reduce the deficit could reduce funding for implementation www.hoganlovells.com 23 Possible State Actions on Medicaid • State goes forward with the Medicaid expansion to all individuals up to 133% FPL as provided under ACA • State declines to implement any Medicaid expansion (and possibly challenges other changes made by ACA) • State looks for options to expand Medicaid, but not all the way up to 133% FPL www.hoganlovells.com 24 Factors Influencing a State’s Decision • Whether the state participated in the litigation • Whether the state opted for the early expansion • Degree to which the state’s coverage of optional and/or waivered categories of individuals currently includes individuals under 133% of FPL • State budget factors, including staff expertise • Pressure from local advocacy groups • How much flexibility HHS decides to exercise www.hoganlovells.com 25 States Participating In The Litigation • 26 States involved in the Supreme Court Case: Alabama, Alaska, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Ohio, Pennsylvania, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin, and Wyoming • Virginia and Oklahoma brought separate legal challenges www.hoganlovells.com 26 States that Opted for Early Expansion • States that already have expanded their Medicaid populations under the ACA seem likely to continue with the expansion in 2014 State Current Medicaid Coverage of Childless Adults California Waiver up to 200% FPL Colorado Waiver up to 10% FPL Connecticut Medicaid expansion D.C. Medicaid expansion and waiver Minnesota Medicaid expansion and waiver Missouri Waiver up to 133% FPL New Jersey Waiver up to 23% FPL Washington Waiver up to 133% FPL Source: Kaiser Family Foundation, “How is the Affordable Care Act Leading to Changes in Medicaid Today? State Adoption of Five New Options,” May 2012. www.hoganlovells.com 27 Percentage of Population Uninsured www.hoganlovells.com 28 Status of Medicaid Expansion www.hoganlovells.com 29 State Actions on Exchanges • As of July 9, 2012: – – – – – • 15 States have established state exchanges 1 State is planning for Partnership Exchange 18 States are studying options 12 States have not taken significant activity 5 States have decided not to create state exchanges If a state does not establish an exchange, the federal government will create one for the state Source: Kaiser Family Foundation, http://www.statehealthfacts.org/comparemapdetail.jsp?ind=962&cat=17&sub=205&yr=1&typ=5, data as of July 9, 2012. www.hoganlovells.com 30 Conclusion • Supreme Court decision allows health reform to move forward – If fully implemented, cancer patients could benefit from: • • • • • • Expanded coverage through exchanges and Medicaid Consumer protections, including better coverage and ending of annual and lifetime limits on coverage Expanded coverage of routine costs in clinical trials Comparative effectiveness research Closing the Part D donut hole Programs, such as ACOs and medical homes, to encourage more coordination of care • Implementation will depend on outcomes of elections, budget battles over the coming months and years www.hoganlovells.com 31 Questions? www.hoganlovells.com 32 www.hoganlovells.com Hogan Lovells has offices in: Abu Dhabi Alicante Amsterdam Baltimore Beijing Berlin Brussels Budapest* Caracas Colorado Springs Denver Dubai Dusseldorf Frankfurt Hamburg Hanoi Ho Chi Minh City Hong Kong Houston Jeddah* London Los Angeles Madrid Miami Milan Moscow Munich New York Northern Virginia Paris Philadelphia Prague Riyadh* Rome San Francisco Shanghai Silicon Valley Singapore Tokyo Ulaanbaatar Warsaw Washington DC Zagreb* "Hogan Lovells" or the "firm" is an international legal practice that includes Hogan Lovells International LLP and Hogan Lovells US LLP. 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